The Power of Proximity: InnoView with Tim Rowe and Carrie Allen
Welcome to our new interview series where we discuss innovation in business with trailblazing CEOs, entrepreneurs, and thought leaders. We are kicking off the series with a conversation between Tim Rowe, Founder and CEO of CIC, and Carrie Allen, Managing Partner of Captains of Innovation in which they discuss the power of proximity, CIC’s journey and growth, and the role that innovation campuses play in robust ecosystems.
Carrie Allen: Thanks for joining us, Tim. It's great to have you on the blog. I think a good place to start is to ask you about your inspiration behind creating CIC, how it has changed over the last decades of work, and where it's heading.
Tim Rowe: First of all, thank you for having me. I'm a strong believer that businesses evolve through a combination of the actual learnings derived from the business over time and the business’s values and purpose. CIC originally was started without much of either: it was an unintentional business. It started as a group of friends from MIT starting their own businesses who thought it'd be fun to do it together in the same place.
What we learned from that was that when you have multiple startups run by strong entrepreneurs sharing the same physical space, they naturally just help each other. The degree of this impact can be surprising.
Strong entrepreneurs tend not to be just capable in their own business. They are capable at everything. So when one startup in the space is looking for investors, or perhaps for a marketing manager or help with a technology problem, other entrepreneurs “in the room” who don’t work for your company turn out to have a lot of the answers. And making an introduction or a suggestion doesn’t take much time. So this amazing resource is, effectively… free. A dividend of sharing workspace with remarkable people.
Carrie, you yourself are an example of one of those people. You founded multiple organizations, including the ArtScience Prize and today’s incarnation of Captains of Innovation. Your personal network in the business world is enormous. As opportunities come along and people have needs, you're able to open doors and help people almost effortlessly. Anyone fortunate enough to count you as their “neighbor” at CIC knows that you are a goldmine for them. Now your readers need to imagine a whole building made up of people like you. The power of it is mind-boggling.
We just thought all this was amazing and that this was a better environment for founding a startup than anything we had encountered before. It can be lonely starting an early stage company, but my gosh, these MIT people in our innovation center had so much to offer each other.
Perhaps the biggest insight is that the ratio between the time required to help someone and the impact you can make is nearly infinite. Rich Miner, one of the co-founders of Android, was here for roughly the first three years of that company’s history. Someone next door to Rich could ask his advice or for an introduction. Responding might take Rich a couple of minutes, max. But the phone call or suggestion he makes could change the whole course of a startup’s destiny. It can be life-changing for the other company.
“What we learned from that was that when you have multiple startups run by strong entrepreneurs sharing the same physical space, they naturally just help each other. The degree of this impact can be surprising.”
The power you get on one end from a small input on the other is absolutely enormous. And so that was the learning: sharing space with other strong entrepreneurs creates a powerful environment.
When we started to grow more, and more companies started saying “Hey, could we hang out with you guys?” we needed more space. More companies came in and then we needed more space again. It was sort of back and forth until we were really a quite enormous presence in Kendall Square.
We started thinking: what exactly is the role of this process in society? We call it startup creation or innovation spaces, but what is it really doing? Does it even matter? Is this a good thing for us to be doing?
It dawned on us that the companies in our innovation spaces were really at the forefront of changing how the world works. A lot of people say “I want to change the world. I want to make the world a better place” and that's a wonderful thing. In almost every walk of life people will say that, but if you ask yourself where is the world actually being changed and who's actually changing it, it's typically startups.
Carrie Allen: Absolutely.
Tim Rowe: Big companies can also change the world. Think of Tesla moving the world faster to electric transportation that can be powered by renewable energy. But often these companies achieve this by acting more like startups. Google changed the mobile phone industry with their Android open source operating system. But it built Android basically as a startup — with much of the technology being built in fact right here at CIC, surrounded by startups. So the “startup approach” is really the blueprint, whether the company is really a startup or a big company that has figured out how to act like a startup.
If you ask what the government is doing, obviously it plays a key role. It sets policies to make the world a better place. For example, if you want to have lower emissions, governments can make a policy requiring lower emissions. But typically, the new possibilities underpinning these new policies comes from an innovator — often a startup — that says “here's a way for this factory to operate and produce fewer emissions.” Again, the root cause of change is frequently these early stage radical innovators.
So we concluded that startups, and particularly the innovation process which sometimes involves larger companies as well, is the origin or anchor of the change that we'd all like to see in the world. We coupled that with our earlier learning that these shared startup innovation environments — and what we now call innovation campuses — help to accelerate the process. They don't accelerate it because there's some smart person telling everyone what to do. It's not that kind of environment. It's because everyone is sharing and helping each other.
So we had a kind of light bulb moment and said “Wow it’s really exciting that we're creating these environments where startups and nimble bigger companies behaving like startups are changing the world.” And through it we're doing something which is perhaps one of the more valuable things that we as human beings could be engaged in supporting. I came away saying “Well, this sounds like my life's work.” I figured out what I want to do with my life and that was in Year One or Two of the business. Ever since then, it's really been just refining and growing that and figuring out how to make it work better. I just love that.
“The power you get on one end from a small input on the other is absolutely enormous. And so that was the learning: sharing space with other strong entrepreneurs creates a powerful environment.”
Carrie Allen: That's amazing and incredibly inspiring. As you have grown CIC, learned your lessons, and shared those concepts with the rest of the world, we're seeing how that's impacting other geographic regions as well. CIC didn't start to expand in those early years, but in 2014 you went to St. Louis. Where is CIC going next?
Tim Rowe: The story there is driven by a couple of things. One, I had small children, so it wasn't for a decade after starting CIC that I felt the breathing room to think about possibly spending a lot of time in another city. So that's part of the human element. We also were skeptical — and wrongly so — about whether this model would work in other places. People would say, “Well, but that's Cambridge, Massachusetts. That's such a unique place. I don't know if this idea that you had is really gonna work in other places,” and we ourselves were worried about that.
It wasn't until 2014 that we expanded to St. Louis. It was our first expansion and that experience is written up in a Harvard Business School case study (Part A and Part B) which is a lot of fun to read. My colleague Dougan Sherwood, who's now part of Captains of Innovation, led that expansion. We learned that it sure does work in St. Louis. It really works well. Our Thursday Gatherings in St. Louis were in fact larger than the ones we were having in Cambridge… up to 600 people per week. One of our key supporters there, the head of the Regional Economic Development Authority, described our impact in St. Louis as ‘seismic.’
It led to such big changes that the US federal government later decided to put a major research arm, the National Geospacial Agency, in St. Louis. In announcing the decision to Congress, they spoke about their visit to CIC in St. Louis. We felt tremendously good about that. It was a multi-billion dollar federal investment in St. Louis that followed the path we had laid out to show how it could become an innovation leader.
Today, we're in amazing cities like Tokyo, Rotterdam, and Warsaw — much farther afield. And I've got to say, I think our business structure is working better in Japan than it even does in the United States. The level of energy and engagement is so high. The growth is so fast. The Japanese Prime Minister came over and used us as a platform to announce his five-year plan to make Japan more of a startup country. He did that at CIC Tokyo partly because he saw that this was the future. At Captains of Innovation, something like half of the corporate clients are Japanese companies who are really seeing the value of the work that we do.
It was exciting to build the model in Cambridge, refine the ideas, and grow it, and now we're really quite big. It's been really exciting in the decade since our first expansion to take CIC to different continents. We are in three continents right now, we have different kinds of facilities and programs in 15 cities around the world. I'm just really excited to continue to grow this.
Carrie Allen: Well that is amazing. I'm super excited to be a part of this story as well. It's really inspiring.
We know that in 2020 the pandemic made everyone in the entire world stop and it changed everything. Now that we're hopefully on the other side of that, social behavior has changed. More people want to do hybrid work to have the flexibility to both stay at home and go into the office. How do you see that type of change and shift in behavior impacting CIC?
Tim Rowe: CIC has always been a flexible workspace. We once analyzed what percentage of the time a typical entrepreneur actually spends in their seat in their office. It was about a third of the time. That's because entrepreneurs are out and about all the time. They’re meeting people, going to conferences, meeting clients, establishing locations, and more. As entrepreneurs, they are very fast-moving individuals.
“It just shows you're going to collaborate with people you like. How are you going to get to know and like someone if you don't spend a lot of time with them? So, you know, it's really that simple.”
-Tim Rowe
So, that's nothing new for us: the idea of people coming in and out all the time. Our space itself is super flexible. I will say that this notion that this change in the way people work is universal is a bit mistaken. We don't see that happening nearly to the same extent outside the United States. In Tokyo, for instance, I was looking at the Monday through Friday workplace attendance, and it's the same each day. It doesn't trend lower on Mondays or Friday. Actually, the lowest day was Tuesday randomly.
So this is really more of a US thing that's going on right now. It’s stronger in some places and less strong in others. In Massachusetts it's stronger for whatever reason. In places like Miami it’s less prevalent. Every city has their own culture.
Hybrid is currently a popular way to work that many companies are exploring. Facebook was a big proponent of this until a few weeks ago, when they published some data finding that their remote workers are much less productive.
I think we still have a lot to learn about this. Clearly remote work can work well for some companies and some people, and it's a strategy. A company can decide their strategy is to be remote, or the strategy is to be heavily hybrid, or the strategy is being together in the office in person.
The CEO of Amazon came out recently and said that he didn't think that a lot of innovation takes place remotely. Certainly a lot of innovation in hard science, deep-tech, lab work, robotics, and life sciences doesn't take place at home. If I had to guess, I would say there will be a certain amount of remote workers for a long time in the United States, but that many companies will move past it and just say, “We're doing the working together thing.”
There's a lot of research about this. It's been done by many organizations using different data sets and it's always the same result. A more recent study was done at MIT looking at scientific papers being published and the distance between the desks of MIT scientists. Basically if you're within 50 or so feet, you have wildly more collaboration than if you're not, and that makes sense because you see each other all the time. Collaboration drops off exponentially with greater distance.
It just shows you're going to collaborate with people you like. How are you going to get to know and like someone if you don't spend a lot of time with them? So, you know, it's really that simple.
Carrie Allen: Perhaps even the long end of this is that there's just more flexibility in the working hours, right? Because it was previously 9:00 to 5:00. People had to clock in and clock out, and maybe there's more flexibility now. You arrive a little bit later to avoid the traffic, for example. But certainly for my team at Captains, the majority of them are in the office every day as well.
“Even when senior managers are committed to seeking out opportunities for revolutionary change, it is hard for them to do it in practice. They have such a big ship to steer. So you need entirely new approaches to solve this problem. One such answer is to begin to behave like a startup yourself, and to engage in innovation ecosystems.”
Tim Rowe: I think you're right. There's flexibility with hours. I think that Zoom is terrific and it eliminates probably a significant fraction of international travel. It's just not that hard to have a quick Zoom meeting with somebody.
But it is natural for people to still want to travel and meet in person. Even after this experience, we somehow know that if someone is going to take on building a large CIC with laboratories that's an investment on the order of, maybe, 50 million dollars. That's about half the price of a US space shuttle. If you're going to commit your institution to making that kind of investment with CIC to build an innovation campus then I think you just have to feel like you know the people. And not just know them intellectually, but really feel like you can have a beer with them and connect.
Carrie Allen: Exactly. It’s important to have that personal connection.
Something we are always striving to support our partners with is disruptive innovation. What is the next big idea? And we really believe it's important for every company to think about how they could possibly disrupt themselves. That's often done through open innovation and scouting for new technology and startups. How do you feel about the relevance of disruptive innovation?
Tim Rowe: I would say a couple things. Many larger companies are really terrific at incremental innovation. It's actually quite natural for people to focus on the here and now, what's around them, and try to make it better. The kind of innovation that's more disruptive by definition comes from outside because when you're inside it's just hard to see the forest for the trees.
Secondly, what people don't really understand as much is that disruptive innovation is the product of a certain amount of chaos. There are many, many entrepreneurs all over the world constantly hacking in new ideas and they started making these ideas reality. There's just something they did right and it's nearly impossible to predict those kinds of changes. That sort of startup innovation approach is made up of tens of thousands of people who are largely unpaid fooling around with ideas until something sticks.
If you think of this kind of innovation — the sort driven by or born in chaos — it’s often the larger part of disruptive innovation. It's not the only part: there are occasionally bright scientists in a corporate setting who are tasked with coming up with completely new ideas and do so successfully. But let's say there are 100 scientists in your company coming up with completely new out-of-the-box ideas. They are still competing with 10,000 entrepreneurs who are doing the same thing. The likelihood that those 100 scientists actually hit upon one of the next big ideas is statistically low, and it's not their fault.
Capturing disruptive new ideas through open innovation is a little bit like just going out and looking at the weather, observing what's going on around your company, noticing that there's a little interesting thing happening over there off there in the distance, and taking a closer look. That sort of curiosity and power to engage with outside innovators is one of the great skills that the next generation of successful companies will cultivate.
Nine times out of 10, when they do that, what they find is not ready. It isn't quite baked or it doesn't quite work. But once in a while, they'll find the next Airbnb or similar disruptive idea.
“You have to pay attention, be humble, and listen to what’s going on out there. The very first moment there’s a spark, you can follow it. ”
I think Airbnb is interesting because there were so many excellent hotel chains that were focused on things like how to make the bed a little more comfortable, which is a good thing to focus on. But they were missing that private homes could become the next big competitor to the hotel industry. Completely out of left field, right? It wasn’t really that they weren’t paying attention. It is just that new ideas really are often so unexpected, you cannot see at all. It takes serendipity, an outside perspective, luck, and lots of people thinking to produce these revolutionary ideas. It is simply very hard to recreate that in-house as a company.
Sometimes some people in large organizations do indeed see these trends coming, but they can’t get their organizations to understand and embrace it. Even when senior managers are committed to seeking out opportunities for revolutionary change, it is hard for them to do it in practice. They have such a big ship to steer. So you need entirely new approaches to solve this problem. One such answer is to begin to behave like a startup yourself, and to engage in innovation ecosystems.
Carrie Allen: Exactly, it's why it's so important. They need to engage. What we tell our corporate partners is to connect with people at CIC, or get active in the ecosystem, or get involved in a Venture Café so that you're aware. You've got to get out there and see what’s happening.
Tim Rowe: Yeah, you've got to get out there and find efficient ways to get out there. We were at a gathering of 100 top Dutch CEOs for the largest companies. One of them in the insurance industry said that they realized they were probably the only person in their company that could bring true disruptive innovation. So they made it part of their day to day; they set time aside to be working directly with startups with new ideas that could change their industry. This was the CEO of a major corporation working directly with startups to understand what they were doing in insurance and how it might change the insurance industry. That's the right way to do it, right? But then how many CEOs actually do that?
Carrie Allen: Well, they don't. Over the years I have quoted the story of when the founder of Netflix went and pitched to the CEO of Blockbuster. At the time, Blockbuster said that's just a small niche market, no one would ever order films through the mail, which is how Netflix operated at first. They had the opportunity to invest for a teeny, tiny dollar amount and kind of scoffed, and left it all on the table.
Tim Rowe: That’s a great example and there are so many stories like that. You have to pay attention, be humble, and listen to what's going on out there. The very first moment there's a spark, you can follow it. If Blockbuster had realized that Netflix was getting traction, they might have been able to invest instead of competing with them.
We have a story about doing this at CIC. For context, we visited a few shared spaces with startups around the world and one was in San Jose, California. I talked to the guy who managed it and he said, “Look, everybody thinks that people want to be in a big open space but startups really don't. They want to be in small spaces with doors because they have secrets and they're going to want privacy.” So I said, “Okay, got it.” And what I built at CIC in Cambridge was very much like that. This approach was our “orthodoxy”.
And then six or seven years later, an entrepreneur in the Cambridge community created a new kind of shared space. He rented a single family home in Central Square and opened up all the rooms, put desks in them, and said startups can just use the space freely and sit at any desk, with no walls between the companies. It was one of the first experiments in so-called “coworking”.
This was radical. I watched that and I thought it was really interesting. This guy became the leading “coworking” operator in Cambridge, and we didn’t have anything like it.
“Ideas like this spread and take root. Sometimes they really work. Sometimes these efforts get overdone. As a practitioner in any given field, you just have to kind of swim through the ideaspace: trying things and exposing yourself to all of these new ideas.”
So I decided to create a small section of CIC that worked like that. We put maybe 20-30 desks in one big room, and invited many different companies to share the room. One of the first groups to move in was MassChallenge, a new startup accelerator. This space concept was really great and dynamic so we decided to build a whole floor of One Broadway with that model. We still have it today. It is wildly successful. It's still only about 5% of our overall business, but it gives our customers an option they didn’t have before. A kind of stepping stone to our regular products. And we are really happy to have it. Are we happy to have open coworking in our ecosystem? Absolutely. It's one of the lowest price points of the products that we offer. Do we think it's the only thing in the future? No. But we embrace it.
I was in Korea recently and I visited a 21 story building built by a group called D-Camp, that we're getting to know. But the entire thing, all 21 stories, was just coworking with just hundreds of hundreds of startups with that open plan space. These ideas have come a long way.
Ideas like this spread and take root. Sometimes they really work. Sometimes these efforts get overdone. As a practitioner in any given field, you just have to kind of swim through the ideaspace: trying things and exposing yourself to all of these new ideas. After some time, often what comes out as the best next idea is actually some third idea — some amalgam of the ideas you see, with some further twist from yourself. You want to ensure your organization is ready for that.
Carrie Allen: Well that's great and you're living by your mission and your brand: innovators supporting innovators. You're actually innovating yourself around the model and changing and adapting.
Tim Rowe: Well, our full name is Cambridge Innovation Center. We like to say that innovation is our middle name.
Carrie Allen: Thanks so much for speaking with us today Tim, this has been very insightful!
Tim Rowe: You’re welcome, thank you for having me.
Stay tuned for our next InnoView post where we will speak to a serial entrepreneur about his lessons in business and frugal innovation!