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Accelerators McNair Center

MassChallenge: Connecting Startups and Big Business

Corporations and startups are moving toward early stage interactions. MassChallenge, a highly successful nonprofit accelerator, has been connecting corporations and startups since its 2010  launch in Boston. MC has several US and international locations, which accelerated 372 startups in 2016.

MC delivers positive results and has been listed among the Best Startup Accelerators by the Seed Accelerator Rankings Project, led by Baker Institute Rice faculty scholar Yael Hochberg.  There are over 1,000 MC alumni, who have collectively raised more than $1.8B in outside funding, generated $700M in revenue and created over 60,000 jobs. According to a 2016 MIT study, MC startups are 2.5 times more likely than non-MC startups to hire at least 15 employees and three times more likely to raise $500,000 in funding.

With seven years of history, notable MC alumni includes Ginkgo Bioworks, which designs custom microbes to produce chemicals, ingredients and industrial enzymes. As a startup, Gingko Bioworks raised $154M in funding and signed a deal for 700 million base pairs of designed DNA — the largest such agreement ever made — with Twist Bioscience. Other remarkable graduates of the program include Ksplice, Turo, Sproxil and LiquiGlide.

An Attractive Alternative for Startups

MC is similar to other startup institutions such as Techstars and Y-Combinator. However, the nonprofit differentiates itself by not taking equity. Entrants to the accelerator must be early stage startups, defined as companies with no more than $500K of investment and $1M in annual revenue. As part of the four-month program, selected startups receive mentoring, co-working space, access to a network of corporate partners, tailored workshops and the chance to win a portion of $2M in zero-equity funding. Additional prizes are provided by partners such as The Center for the Advancement of Science in Space (CASIS) and Microsoft’s New England Research and Development Center.

For entrepreneurs in regions with mature ecosystems like Silicon Valley and Boston, MC is one option among an array of accelerators and informal networks. This  density of resources is called  agglomeration, a geographic concentration of interconnected entities increases interactions and the productivity. The MIT study suggests MC acts as a complement to the prior advantages of startups in established ecosystems by providing key resources and access to social capital  and also found evidence that startups founded in regions with higher access to early stage investors had on average higher quality ideas, but that their chances of success were not higher conditional on the quality of their idea.

For startups in nascent ecosystems the resources provided by MC can become the only option to pitch their ideas to investors and advance their company at no cost other than the time invested on the program. Of equal value is the endorsement received as a MC graduate inferring the quality of the startup venture.

A Model Built on Strategic Partnerships

As a nonprofit, MC depends on the support of a network of public, private and philanthropic partners, with the vast majority of their funding coming from corporations. Governments and philanthropic foundations fund MC with the goal to foster regional economic growth. Founders John Harthorne and Akhil Nigam, former consultants at Bain & Company, garnered early support from the Commonwealth of Massachusetts, successful entrepreneurs and large corporations such as Blackstone, Microsoft and the nonprofit Kauffman Foundation.

MC could have faced financial challenges by providing accelerator programs at no cost and with no equity commitment. However, MC was able to become a bridge between large companies’ need for innovation and startups’ need for capital. Large companies have the scale of resources, customer information and market experience, but may lag in innovation. Startups, on the other hand, lack the resources but innovate with sometimes disruptive and successful ventures, frequently taking incumbents by surprise (Airbnb, Uber).

MC serves as a channel between startups and established companies to meet the need for fast-paced innovation. Companies like Bühler and PTC partner with MC to source high-potential startups for the development of advanced technology. Companies can also source tailored programs or tracks for specific needs.

A study done jointly by MC and innovation firm Imaginatik looked at how startups and corporations interact in new collaborative ways. The research team surveyed 112 corporations and 233 startups from various industries. 82 percent of the corporations considered startup interactions important, and 23% stated that these interactions are “mission critical.” Startups have a high interest in working with corporations with 99% stating it is important for them to interact with potential corporate customers, marketing channels and strategic partners.

Expansion

MassChallenge was located at One Marina Park Drive until 2014.

MC communicates its impact and vision to donors by demonstrating the cost-effectiveness of alliances between startups and corporations. A solid accelerator program, global vision, robust network and a sustainable funding strategy have set up MC for success. As stated in the MC Impact Report 2016, the accelerator is committed to running 12 locations annually by 2020, including at least one on each populated continent.

Before establishing an MC accelerator, the metropolitan area is evaluated for the quality of its research universities, urban setting, level of entrepreneurship opportunity and investment capability. As government and private stakeholders partner, a sense of shared ownership becomes crucial to consolidating efforts. This engagement guarantees that the resulting ecosystems are seen as a shared legacy.

The next MC sites are yet to be announced. Currently in five locations with global impact, MC’s 2020 vision is on a path to become a tangible reality.

The author and editor would like to thank Tay Jacobe for assistance with researching and drafting this post.

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McNair Center Women

Women in Top Tech Companies

In 2014, many of the top tech companies released information on their employee diversity demographics for the first time, bringing attention to the low representation of women in top tech companies. This post looks beyond these numbers. How are tech companies responding to this gender imbalance?

The top five tech companies by market cap are, in order: Apple, Alphabet (Google), Microsoft, Amazon, and Facebook. The gender balance of each company’s workforce is in the table below:

women-workforce-table
Sources are linked for Apple, Alphabet, Microsoft, Amazon, and  Facebook. Data on national averages can be found here and here.

All of these companies are seeking to improve their gender balance and support current women employees. Resource groups, family benefits and smart hiring practices are some of the most common solutions. Even when these efforts are made, the male-dominated work environments can be far from ideal for women at these companies.

Women Employee Experiences

Resource Groups

Resource groups can serve as valuable support networks for women employees. Each of the top tech five has at least one employee resource group for women (Apple: Women@Apple; Google: Women@Google, Google Women in Engineering; Microsoft: Women@Microsoft; Facebook: Women@Facebook, Amazon: Women@Amazon, Amazon Women in Engineering, Women in Finance Initiative). All of these groups share similar goals: empowering women in their workforce and providing networking opportunities.

Many of these resource groups also participate in community outreach, engaging young girls and women and creating programs to foster their interests in technology. (See Women in STEM: Closing the Gap for more information on how community outreach can help change the culture around women in STEM in the United States.)  After recognizing that underrepresentation of women in tech is related to the lack of educational STEM exposure and encouragement for women, Facebook created Computer Science and Engineering Lean-In Circles to support women in college who are interested in CS.

Conferences

Sponsoring women’s tech conferences, like the Grace Hopper Celebration of Women in Computing or the Women in Real Life (WiRL) Conference, is also common among these resource groups. Amazon even holds its own conference: Every year, the women’s resource groups at Amazon also team up to host AmazeCon, a diversity conference that focuses on the achievements due to diverse teams at Amazon. The conference draws thousands of experts and leaders to discuss the importance of diversity in creativity and accomplishments.

Microsoft has taken an extra step by creating an innovative program for women, Women Think Next. WTN is a “worldwide community for professional women,” bringing together women from varying fields and backgrounds to network and support one another.

The program is not limited to Microsoft employees. WTN encouraged any and all professional women around the world to join. Women Think Next holds an annual networking conference and provides resources for women throughout the year. The conference also serves as a recruitment event for Microsoft to hire women with strong skills.

Employee Complaints

Everything isn’t always as it seems on paper, though. The male-dominated work environments at these companies can be isolating for female workers. In 2015, Microsoft faced a lawsuit accusing the company of gender-discriminatory policies in employee reviews. In May 2016, a former Facebook contractor published a piece on the sexism she experienced while working on a project team. During September 2016, Apple received criticism in the media for a series of leaked emails that revealed the company’s unresponsiveness to concerns of women employees. Through these emails, women employees described the company’s atmosphere as “toxic,” including workplace harassment and gender discrimination.

It is important to note that these are all anecdotal experiences. Each company responded by emphasizing that they take complaints like these seriously. The sensitive nature of the companies’ investigations of these claims prevents more information from being public.

Work-Life Balance

In American society, women often face conflict between the gender norms surrounding women’s family responsibilities and a desire to pursue a career. Maternity and family leave benefits can be an important factor in a woman’s decision to stay with a company in the long run, especially after she has started a family.

Of all of the Organization of Economic Cooperation and Development member countries, the United States is the only one that does not mandate paid maternity leave. According to the most recent statistics, only 12% of Americans receive this benefit.

However, within the tech top five, they seem to go far and beyond this requirement. Below is a summary of the family leave benefits for the tech top five.

maternity-leave-chart
Sources are linked for Apple here and hereAlphabet, Microsoft here, here and here, AmazonFacebook, and National Standard

It is not surprising that these companies give generous benefits. Named the best place to work in the U.S. in 2015 by both Forbes and Glassdoor, Google is known for its employee perks. One of Google’s greatest strengths lies in its emphasis on self-study to determine workforce problems and find solutions. In 2007, Google’s People Operations (AKA Human Resources) department noticed that new mothers left Google at twice the average departure rate. In response, the company decided to lengthen paid maternity leave from 12 to 18 weeks. After this change, Google’s departure rate for new mothers dropped by 50 percent.

Controversial Benefits

In 2014, both Apple and Facebook received media attention for their announcements that they would pay to freeze U.S.-based employees’ eggs. Apple announced it as a new dimension to their support for infertility treatments. The move was met with mixed reviews by the media. NBC News praised it as a “game-changing perk,” but The Guardian denounced it as “unreasonable and illogical.” Supporters of the policy argue that it gives female employees more flexibility in their decision to have children. Critics claim that the policy sends the wrong message, implying that if female employees want to succeed at work, they need to delay motherhood.

Parental Equality

It is important to look not only at a company’s maternity leave policies, but at their parental and family leave policies as well. Studies of maternity and motherhood-related policies in other countries, like a mandated child care law in Chile and a reduced hours law in Spain, have shown that offering parental benefits only to women can lead to a decrease in salary and promotion rates of all women at a company, even those who don’t take advantage of them. One approach to combating these negative effects could be making these policies gender-neutral. This would allow for men to take advantage of these policies and reduce gender-discriminatory practices.

Hiring, Promotions and Pay

Facebook has received attention for its hiring point system. Facebook’s recruiters receive points for new hires, but based on the new recruits’ diversity, it can earn recruiters more points. White or Asian males only count for one point, whereas black, Hispanic, or female new hires count for two points. Higher point totals can lead to good performance reviews and bonuses for recruiters. This system incentivizes the creation of a more diverse workforce.

At Google, employee studies showed that women were less likely than men to submit their names for promotions. After Google brought this information to the attention of women employees, this discrepancy disappeared. Google now prides itself in the fact that they promote women and men at the same rates.

In August 2016, Apple announced plans to increase hiring of women and minorities. During the same announcement, they celebrated their official elimination of all gender pay gaps within the company. To maintain this, they have pledged to analyze and correct any gaps as they may arise in the future.

Amazon has also addressed its pay gap. Amazon boasts that women earn 99.9 percent of men’s salaries, explaining that the percentage fluctuates annually, so that it may not always reach a perfect 100 percent. However, Amazon has received criticism on its diversity reports for not including statistics on the percentage of women who make up their tech workforce. This discrepancy has led media to question whether Amazon has something to hide. Until Amazon releases more information, there is no way to know the state of female representation in their tech workforce.

What Does This Mean?

When compared to national averages, women are not as well-represented in the top tech companies. However, these companies provide benefits and services to their women and employees that are above and beyond the norm. Nonetheless, as the anecdotal experiences of the women at Apple, Facebook, and Microsoft have shown, a company can offer great benefits while still tolerating a discriminatory workplace environment.

Regardless, these companies need to develop new strategies  to address low women’s representation. Only time will tell how future policy, research, and incentives will impact women’s employment in the tech workforce.

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McNair Center Weekly Roundup

Innovation Weekly Roundup: 11/04/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about innovation this week:


Microsoft Puts Slack in Cross Hairs with New Office Chat App

Nick Wingfield, NY Times
Tech companies are moving in on Slack’s popular team-messaging market as Microsoft joins Facebook in taking on smaller players in this space. Microsoft’s size and distribution power is not enough to enter a new market. Their product must be innovative, not just another app in the Microsoft Office suite. Slack, in response, took out a full-page ad in the New York Times. They sarcastically congratulated Microsoft while also highlighting the innovations Slack has brought to numerous workplaces.

Microsoft’s current Office suite is just not keeping pace with the changing dynamics of the workplace, which require collaborative software. Slack, and other team messengers, enables multi-channel communication to organize discussion without relying on email. It is additionally fully searchable and allows a variety of app integrations. Team-messaging applications increase transparency and decentralize discussion. They are used at a variety of workplaces emphasizing collaboration (including here at the McNair Center).


AIA Patents – Approaching 50% of newly issued patents.

Dennis Crouch, Professor – University of Missouri School of Law

Crouch has created a chart showing the percentage of patents granted under the first-to-file provisions in the 2011 America Invents Act (AIA). The AIA changed the patent application rules from first-to-invent to first-to-file. By the end of 2016, half of all new patents issued would have been filed under first-to-file rules.

Patents filed under the AIA are subject to post grant review (PGR). A third party successfully petitioning that at least one claim is unpatentable can initiate the PGR process. The purpose of PGR is to dispose of bad patents early in their life through the USPTO rather than the legal system. Petitions must be entered within 9 months of a patent being issued and a final decision of validity is made in less than a year.


Innovation Labs: 10 Defining Features

 Dr. Lidia Gryszkiewicz, World Economic Forum
 Dr. Tuukka Toivonen, University College London
 Dr. Ioanna Lykourentzou, Luxembourg Institute of Science and Technology

Innovation Labs are essential workspaces for collaborative innovation. However, innovation labs’ missions and features are often ill-defined. A simple “I know it when I see it” style definition is not sufficient. Three experts in social innovation have reviewed innovation labs around the world to determine what features are essential. A few key findings include innovation labs needing heterogeneous participants, focus on experimentation and an expectation of breakthrough solutions. Such distinctions can help guide new labs and promote innovation across a variety of industries and social areas.

Additionally, creating a definition for these labs helps distinguish them from other similar models like living lab and coworking spaces. In summary, the writers of this piece define an innovation lab as “a semi-autonomous organization that engages diverse participants—on a long-term basis—in open collaboration for the purpose of creating, elaborating and prototyping radical solutions to pre-identified systemic challenges.”