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Ink

It takes a Google village to grow tech startups

As Adam Arredondo, CEO of Local Ruckus, streams online, Matthew Marcus, CTO, and Ben Estes, who works for Google, watch the speed test numbers of the new Google Fiber connection at KC Startup Village.

Adam Arredondo (left), CEO, and Matthew Marcus, CTO, of Local Ruckus, a Hanover Heights fiberhood in Kansas City, Kan., high five near the completion of the Google Fiber installation process.

Matthew Marcus (from left), CTO, and Adam Arredondo, CEO, of Local Ruckus, a business in the KC Startup Village house in the Hanover Heights neighborhood in Kansas City, Kan., smile. They got connected during one of Google Fiber's first installations Tuesday, Nov. 13, 2012.

Matthew Marcus (right), CTO of Local Ruckus, takes a peek at his new Google Fiber network box before Ben Estes, who works for a Google contractor, begins the installation Tuesday, Nov. 13, 2012, in Google Fiber's first public installation.

Mike Demarais, 20, moved from Boston to a small Kansas City, Kansas home at 44th & State Line Road to become a resident of Kansas City's first "fiberhood," as Google is preparing to launch its gigabit high-speed ethernet internet service.

Mike Demarais, 20, moved from Boston to a small Kansas City, Kansas home at 44th & State Line Road to become a resident of Kansas City's first "fiberhood," as Google is preparing to launch its gigabit high-speed ethernet internet service.

Mike Demarais, 20, is part of a growing community of entrepreneurs who live in the Kansas City, Kan.'s Hanover Heights neighborhood.

Adam Arredondo (right) and Matthew Marcus, both with Local Ruckus, give a presentation on Monday, Nov. 12, during Demo Day of the Global Entrepreneurship Week at the Kauffman Foundation.

Michael Demarais, with Threedee, gives a presentation on Monday, Nov. 12, during Demo Day of the Global Entrepreneurship Week at the Kauffman Foundation.

Adam Arredondo listens to Matthew Marcus, both with Local Ruckus, as they give a presentation on Monday, Nov. 12, during Demo Day of the Global Entrepreneurship Week at the Kauffman Foundation.

Adam Arredondo, with Local Ruckus, gives a presentation on Monday, Nov. 12, during Demo Day of the Global Entrepreneurship Week at the Kauffman Foundation.

Michael Demarais, with Threedee, gives a presentation on Monday, Nov. 12, during Demo Day of the Global Entrepreneurship Week at the Kauffman Foundation. A growing community of entrepreneurs live in the Kansas City, Kan.'s Hanover Heights neighborhood hoping to take advantage of Google Fiber.

“Google Fiber is an amazing tool, but it’s also a way to build awareness for the awesome stuff going on in Kansas City.” Matthew Marcus, KC Startup Village co-founder

Ink

On a sunny Tuesday afternoon in November, Matthew Marcus stood in his Kansas City, Kan., front yard with a TV news reporter, two photographers and a technician sent to hook Marcus up with Google Fiber, a new Internet service that promises connection speeds 100 times faster than broadband.

As the cameras rolled and clicked, Marcus, wearing a face-splitting grin beneath his handlebar mustache, pulled the burly technician into an enthusiastic hug.

Around the side of the bungalow, a contributor to Wired and Fast Company politely stayed out of the shot, his notebook tucked in a back pocket, as he waited for Marcus to finish up. Another reporter, this one from a local newspaper, scribbled notes from her Corolla, parked behind the TV news van.

This is what happens when Google comes to town.

Last year, the technology giant announced it would test its new blazing-fast Internet in Kansas City, Kan. Two weeks ago, Google made good on its promise by hooking up residents in and around that city’s Hanover Heights neighborhood with Google Fiber.

Among the first in line: Matthew Marcus and about a dozen other local entrepreneurs working from two houses and an office building near 45th and State Line.

The community, now known as KC Startup Village, is less than two months old. But it’s already snagged features on CNN, the Huffington Post and the Wall Street Journal, which published a story with the headline “High-Speed Internet Spawns Prairie Startups.”

The story is appealing: A bunch of would-be Mark Zuckerbergs drawn like moths to Google Fiber’s flame in a sleepy neighborhood known for antiques stores.

But that’s not the whole story. Talk to any local entrepreneur and they’ll tell you Kansas City’s startup scene has been steadily gaining momentum over the past year, and that Google Fiber is just one of many forces behind that momentum.

“There’s a lot more going on here than ‘Hey, we want fast Internet,’ ” Marcus says.

The rise of Kansas City’s startup scene is linked to a growing national focus on entrepreneurship that started in January 2011, when the White House launched Startup America, an initiative to encourage and support high-tech entrepreneurs.

Startups define the American dream, said President Barack Obama in his speech. “The idea that if you have a good idea and are willing to work hard and see it through, you can succeed in this country.”

Two months after that speech, one of the most successful startups in America announced it would launch its groundbreaking super-fast Internet service in Kansas City, Kan. As the buzz around Google Fiber spread, people started to wonder what Kansas City would do with this new technology when it went live.

We’ll become America’s Most Entrepreneurial City, vowed the Greater Kansas City Chamber of Commerce later that year.

The chamber assembled a team that included leaders from some of Kansas City’s most successful companies (UMB, Cerner) and top resources for entrepreneurs (the Kauffman Foundation, the University of Missouri-Kansas City) and asked them to make Kansas City into an ideal ecosystem for entrepreneurs within five years.

That same month, H&R Block’s co-founder gave $32 million to UMKC to fund the Henry W. Bloch Executive Hall for Entrepreneurship and Innovation. It was the largest gift in the school’s history.

As these huge initiatives made news, Kansas City entrepreneurs were quietly toiling at their laptops, developing ideas they hoped to turn into successful companies.

UMKC student Evan Kirsch founded Folioboy, a site that helped college students produce portfolios online. His school provided Kirsch with free office space and legal work, giving the Pittsburgh, Penn., native a good reason to grow his budding company here in Kansas City.

Meanwhile, other local entrepreneurs were working on new ways to raise money for community projects (Neighbor.ly), search the Web in real time (Leap2) and identify people by using veins on their eyeballs (EyeVerify).

There was a lot of innovation, but not much interaction.

“The startups were on islands by themselves,” says Sara Davidson, a marketing consultant who works with startups and co-hosts a new KMBZ radio show called Entrepreneur KC.

Because Kansas City is so sprawled out, the chances of one entrepreneur bumping into another were slim to none. And building a community of startups, in which entrepreneurs pool their knowledge, resources and ideas, was near impossible.

In March of this year, the Kauffman Foundation hired a community builder, Nate Olson, and sent him on a mission to connect Kansas City’s entrepreneurs. Olson started going to every networking event he could find which, turned out, required a lot of drinking.

“A lot of after-hours networking events are at bars,” Olson said. “That’s fine, but does anything really beneficial happen? When people are drinking beers, they’ve kind of shut off for the day.”

Other events for entrepreneurs didn’t happen often enough. Kansas City’s Startup Weekend, which challenges teams of entrepreneurs to form a startup in 54 hours, has become increasingly popular over the past two years. But it only happens twice a year.

So Olson worked with Cameron Cushman, manager of entrepreneurship at Kauffman Foundation, to come up with a new event that would bring local entrepreneurs to the same room on a weekly basis.

1 Million Cups was founded on the idea that if local entrepreneurs shared that many cups of coffee, “it would change the culture of entrepreneurship forever in Kansas City,” Olson says.

The event started small, with 12 people in a room on a Wednesday morning in April. Olson’s goal was to invite two local startups to share their stories at every event. That was pretty lofty, considering he knew of five startups at the time.

In the seven months since 1 Million Cups launched, more than 60 startups have presented. Attendance has grown steadily to around 110 people, with 35 more watching online.

Recently Olson handed the event over to a small team of local entrepreneurs so he could focus on expanding 1 Million Cups to 20 cities over the next year. Des Moines launched its first 1 Million Cups in a coffee shop two weeks ago.

1 Million Cups has become a mandatory gathering place for local startup entrepreneurs in Kansas City, says Matthew Marcus, who regularly attends with his business partner Adam Arredondo. Arredondo and Marcus are working on a website called Local Ruckus that helps people find and share events happening nearby.

They’re also working to make KC Startup Village the physical epicenter of the local startups scene. Their guidebook: “Startup Communities: Building an Entrepreneurial Ecosystem in Your City.”

“Startup Communities,” which came out last month, was written by Boulder, Colo., investor and entrepreneur Brad Feld. In the book, Feld lays out a recipe for building a startup community in any city. One of the key ingredients is density.

The thinking: When a community is dense with entrepreneurs, they’re more likely to collide, collaborate and succeed. And when companies succeed, the community succeeds.

That philosophy is why 1 Million Cups and KC Startup Village are focusing on getting Kansas City entrepreneurs packed in tight.

“We’re providing a space for those unlikely collisions to happen,” Olson says.

Cities known for startups usually have high concentration areas where entrepreneurs intermingle. Think Silicon Valley in the San Francisco Bay Area or Silicon Alley in New York City. Even Des Moines has its own startup neighborhood, Silicon Sixth Avenue.

The entrepreneurs that make up KC Startup Village are trying to boost density by inviting more startups to move in. Arredondo has a friend in Portland, Oregon’s startup community who’s started looking at homes in the Hanover Heights and West Plaza neighborhoods.

But this neighborhood isn’t exactly bustling yet.

Head to 45th Street and State Line Road on a weekday afternoon and you’ll see only a handful of shoppers browsing antiques stores and frame shops. The salons — some for humans, some for dogs — seem to enjoy brisker business. The area’s only coffee shop, Eddie Delahunt’s Cafe, is inside a quaint old Victorian with big windows and creaking floors.

Barista Jessica Kroh says she hasn’t seen a spike in coffee sales since the KC Startup Village was founded in September.

“They have a lot of vision and a lot of passion,” Kroh said, “but it’s only the beginning.”

Not all residents are aware of their neighborhood’s new reputation as a tech hub.

“Gooble?” asked a puzzled neighbor when we asked him what he thought of the KC Startup Village and Google Fiber.

It’s a big switch in thinking because until now, 45th and State Line has been an intersection where people go to find relics from the past, not to test technology of the future.

There used to be at least 30 antiques stores here, says Ray Wright, who co-owns Show Me Antiques at 4500 State Line Road.

“But that was before the Internet,” Wright says.

The Internet (and more specifically, eBay) stole business from this neighborhood by making it easier for people to buy and sell antiques online. Now the Internet is attracting businesses back. But these are different. They have the potential to grow fast — or fail fast.

Startups have a very low success rate, says Trish Headley, a former hedge fund manager who owns Nufangle, an antiques store across the state line from the epicenter of the KC Startup Village.

“That’s just a business fact,” Headley says. “But enthusiasm and youth are powerful things.”

KC Startup Village was built on a series of coincidences.

Marcus had inherited a house in Kansas City, Kan., but he wasn’t using it. In September he agreed to lease the house to Leap2, the local startup working on the technology to search the Web in real time.

Three days later, Marcus joined Local Ruckus and made an agreement with Leap2 to use the basement as an office. Another local startup, Formzapper, moved in, too. Three more startups were working out of a nearby office.

Suddenly, there were six startups within a half-block stretch of State Line. And they happened to be in Google’s first Fiberhood.

“It’s almost like it was meant to happen,” Arredondo says, “like there’s a force or energy behind it that’s beyond our control.”

The entrepreneurs didn’t know at the time that a web developer from Overland Park had bought a house five doors down and was planning to turn it into a crash pad for Google Fiber tourists.

The developer, Ben Barreth, emptied a retirement account to put 20 percent down on the $48,000 house. His plan: Attract high-tech startup entrepreneurs to Kansas City by letting them live in the house for three months at a time for free. He would even pay for utilities and Google Fiber service, which costs around $70 a month.

“Nobody was talking about how we can exploit Google Fiber,” Barreth says. “Nobody really knew how it was going to change things, or why it was cool. This is something we can do to make the most of Fiber.”

On his blog, Barreth asked other Kansas City homeowners to offer spare rooms to entrepreneurs who could use Google Fiber to develop their projects. So far, 15 homeowners have signed on, but none get Fiber until 2013.

When members of KC Startup Village found out about Homes for Hackers (hackers, by the way, doesn’t mean cybercriminals in this context), they offered to help ready Barreth’s house. They assembled on a Saturday to rip out carpet stained with cat pee, clean the gutters and move in furniture.

The Homes for Hackers house is sparsely furnished with a few beds, a couch, several desks and office chairs and an old refrigerator.

On Halloween, a 20-year-old entrepreneur from the Boston suburbs moved in. For the first few days, Mike Demarais slept on a mattress on the floor with a towel for a pillow. There was no electricity, so Demarais lived on takeout and went to McDonald’s for WiFi.

Demarais is trying to develop software that will help consumers customize everything from knife handles to T-shirts and iPhone cases. His dream is to revolutionize manufacturing. But his startup, Threedee, isn’t registered as an LLC yet.

Moving from Boston, a city with an extremely dense startup scene, to Kansas City, where the community is still new, doesn’t seem like the smartest decision.

But in Boston, “everybody has an idea,” Demarais says, “so it’s hard to stand out.”

Demarais has found standing out in Kansas City much easier. Since moving here last month, Demarais and his startup have been featured by the Wall Street Journal, CNN and Ars Technica, a popular technology news site.

The interviews and photo shoots have left Demarais little time to do what he came here for: Develop his idea into a company. But he figures media attention can’t hurt his prospects. And he gets that people are eager to see him as the first of many high-tech entrepreneurs that Google Fiber reels into Kansas City.

“That’s the narrative,” Demarais says. “I’m not naive.”

Now that everything’s slowed a bit, Demarais hopes he can get some work done. He’s more settled in the Homes for Hackers house — his T-shirts are unpacked and there’s a real pillow on his bed — and he is getting used to roommates.

Synthia Payne came to Kansas City from Denver for the Kauffman Foundation’s Global Entrepreneurship Week. She’s working on a startup called Cyberjammer that will allow musicians to jam in real time over high-speed Internet connections. Payne says she’s considering moving to Kansas City for Google Fiber.

Andrew Evans crashed at the house recently, too. The self-described “codetrepreneur” from San Francisco is working on a blogging platform for Web developers. Evans says he’s surprised at the level of entrepreneurial activity in Kansas City.

“There’s a huge buzz here,” he says. But because he’s been meeting so many people, Evans had little time to write code for his blogging platform. And he’s starting to get the itch.

“I’m a coder,” Evans says. “That’s my music, that’s my art.”

The attention surrounding Google Fiber has aimed a bright spotlight on KC Startup Village and Kansas City’s startup scene, says Nate Olson.

“But all this momentum is also serving as a distraction,” Olson says. “Moving forward, we’ve got to make sure that these guys who want to start all these awesome things are also starting their companies.”

He adds that what Kansas City needs next is more “big brother” startups that can show first-time entrepreneurs how to reach the next level of success.

Companies like Red Nova Labs and RareWire already are easing into that role. Red Nova Labs, a software and app development firm founded in 2009, has more than 20 employees working in its Westwood office. The company hosts a monthly happy hour called Venture Fridays.

RareWire, a two-year-old company based downtown, develops software that enables web developers and designers to build mobile apps. The company also teaches local entrepreneurs how to build apps through free classes at the Kauffman Foundation.

People outside Kansas City are helping mobilize the community, too.

Shashi Jain, the Portland, Oregon, entrepreneur who’s looking at houses in Kansas City, Kan., says Google Fiber and the KC Startup Village caught his attention.

“In Portland, we have a very vibrant startup community with a strong spirit of collaboration,” Jain wrote in an email. “Companies that have grown large, such as Urban Airship, Puppet Labs, Jive Software and ShopIgniter consistently give back to entrepreneurs such as myself.”

Jain, who has roots in Kansas City, believes building a collaborative community here is “critical” to the success of local startups.

So does Silicon Prairie News, a digital media company that highlights and supports Midwestern tech entrepreneurs. In September, SPN netted a $225,000 sponsorship from the Kauffman Foundation and started strengthening its presence in Kansas City.

Recently the company moved an editor, Michael Stacy, to Kansas City and hired a local community builder, Regan Carrizales. Silicon Prairie News is also planning a two-day conference for entrepreneurs in March. Big Kansas City will be similar to Silicon Prairie News’ Big Omaha event.

In the midst of all this excitement, entrepreneurs in KC Startup Village are getting acquainted with Google Fiber.

Mike Demarais says he can download full albums within seconds, and that Web searches yield almost instantaneous results.

Matthew Marcus says he’s able to download a 30-minute HD movie in less than 20 seconds. That used to take him five to 10 minutes. But Marcus and Arredondo aren’t sure yet how Google Fiber will help them with their startup, Local Ruckus.

“We get that question a lot,” Arredondo says. “It’s tough to answer. Check back in a month. Check back in six months.”

It’s highly likely that reporters will be checking back with the KC Startup Village that soon. Because this is a really good story, and it’s only just begun.

Comments

  1. 1 year, 9 months ago

    Very nice article. Great to see all of these next-gen talent at least having a footprint in KC. Interesting to see which local digital companies are enabling this evolution….. and which are not. Tech companies that are truly part of this digital evolution choose to participate in it to leave their own footprint. Some other local tech companies claiming to be part of this digital evolution group are threatened by losing their competitive edge, which is the stranglehold their proprietary technology.

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