The short history and big impact of the Emerging Technology Center
By By Andrew Zaleski
For The Baltimore Sun|
Aug 12, 2014 at 12:29 PM
In August 2006, Millennial Media -- a digital advertising company founded in Baltimore just two months prior -- made a move that shaped its future.
The company's three co-founders took up office space inside the Emerging Technology Center (ETC), an incubator of startup technology companies that opened its doors in the Signature Building of the Can Company complex in Canton in 1999. Two years later, when Millennial Media moved out of the ETC and into the complex's adjacent Factory Building in October 2008, it was a company of 85 full-time employees. Today, the company that specializes largely in placing display ads inside the apps people tap open on their smartphones still calls Baltimore, and the Can Company, home.
And Millennial Media has offices around the world — London, Singapore — is traded publicly on the New York Stock Exchange, and is a direct competitor to Google in the mobile advertising market.
"It was powerful," says 43-year-old co-founder Paul Palmieri of Millennial Media's time at the ETC (Palmieri stepped down as CEO this year). "When you're starting a company and you're in growth mode, the key is to minimize distractions and to allow focus. It was a helping hand to small companies."
Fifteen years after its founding, the ETC's helping hand is still around. Last fall, after 14 years at the Can Company, the ETC moved its Canton operation into a new space in Highlandtown. In the middle of the last decade, in conjunction with the Johns Hopkins University, the ETC opened a second facility on East 33rd Street inside the old Eastern High School. By the ETC's own estimates, more than 350 companies responsible for creating 2,300 jobs have passed through its doors since the late 1990s.
Formed in a partnership between the Baltimore Development Corp. and the Maryland Economic Development Corp., the ETC — which receives one-third of its annual $2 million operating budget from the city — says that 86 percent of those companies, all of which are technology-based or technology-enabled, are still in existence. As of this month, 59 companies occupy a total of 65,000 square feet of real estate inside the two offices of the ETC.
Its ultimate goal can be distilled into a sentence: Provide a place for very young technology companies to grow until they're ready to leave and, the thinking goes, set up their own offices inside Baltimore.
But what the ETC does — or why emerging technology companies, which are so often well fortified financially thanks to deep-pocketed venture capitalists, would need such a space — can be something of a puzzle. Deb Tillett, the third in a line of ETC presidents, who assumed her post in July 2012, uses the dictionary definition of incubator as a starting point.
"A safe, controlled environment in which to grow," says Tillett, 61, during an interview at the ETC's Highlandtown facility, a sprawling, L-shaped office space that takes up 20,000 square feet on the third floor of the renovated King Cork and Seal Building on North Haven Street. "It means there's an environment where all the entrepreneur or business owner has to do is concentrate on their business because the lights are always on, the door is open, there are multiple shared services, someone gets your mail for you, the coffee's made. You walk in the door. You put your head down. You go to work."
The ETC's Haven Street space, however, looks nothing like the typical cubicle-filled workplace. Much of the old brick is still exposed on the inside. The vertical wood support beams, relics of the King Cork and Seal Building, weren't covered up during the renovation. And the ceiling ducts are visible, a design aesthetic that gives the Highlandtown office an industrial vibe. The floor plan is completely open — tables surrounded with black, ergonomic desk chairs on wheels are strewn about — although there are several, dedicated office spaces for specific startups lining the walls and separated from center area by sliding pane doors. People, mostly in their 20s and 30s, some in T-shirts and shorts, can be found working on most weekdays, but there are older entrepreneurs in shirts, slacks and blazers as well.
Tillett says that any startup can apply for space in the ETC if it meets three conditions. First, the startup must be technology-enabled, a definitive sticking point. A startup retail company selling cosmetics, to use Tillett's example, wouldn't qualify. Second, the startup should have an innovative business model or idea. Finally, there should be a case to make that what the ETC can offer will help the fledgling company.
Not having to worry about empty toner cartridges in the copy machine or the quality of one's cup of French roast are certainly some reasons why entrepreneurs apply for space at ETC. (Tillett says seven startups are on her waiting list at Highlandtown; at 33rd Street, three companies recently moved out.) More important is what the ETC provides under the catch-all term resources: weekly clinics where local accountants, lawyers and marketing professionals offer advice and direction to unsure startup founders; access to local investors, people Tillett knows by virtue of her position as ETC president and as a veteran of Baltimore's gaming industry through her employment at studios including MicroProse and BreakAway Games; camaraderie with fellow entrepreneurs who know what it's like to be sitting on no revenue with payroll coming up.
Another benefit for startups are the lease terms, which are generally two years with an optional third year, plus the ability to terminate a lease at any time, for any reason, with 60 days' notice. Rental rates go by square footage: At Haven Street, it's $15 per square foot for offices between 300 and 700 square feet; at 33rd St, it's $19.85 per square foot for offices between 450 and 1,850 square feet. Monthly rent also includes utilities, a 100-megabyte Internet connection, and access to the ETC resources. And it's all backed by Tillett's promise that she won't "shut your business down because you can't pay your rent."
In some cases, one of the benefits to joining the ETC is cash investment, which was what lured Jess Gartner.
"We exist largely in part because of the ETC," says Gartner, the 27-year-old founder of Allovue, a Web tool that visualizes and tracks budget spending and allocation for school administrators at the elementary, junior and high school levels.
Her startup recently raised $800,000 and plans to go for a similar amount this year. But a year and a half ago, the Hollins Market resident was one person with a business concept picked to spend three months at the ETC as part of Accelerate Baltimore, a program the incubator has run since 2012, whereby four to six startups receive all the ETC's resources, as well as free rent and $25,000 in funding provided by the Abell Foundation. After her three months at the accelerator, Gartner took up office space at the ETC in Highlandtown.
"The office space we have today is about a third of what we'd find anywhere else in terms of cost," she says. "So only having peripheral costs means I can spend more money to hire people."
Allovue has done just that. In 18 months, Gartner's company has gone from just an idea to having a full-time staff of seven now getting ready to assist three school districts and one state in the U.S. with pilot versions of the Allovue software this fall.
Andrew Schuster, the 27-year-old founder of NewsUp, also attributes his startup's success to the ETC. His company had been at the ETC's 33rd Street location for about a year before being accepted into the inaugural group of Accelerate Baltimore startups. It was the $25,000 — and the office space NewsUp, an online trivia game culled from the news, subsequently took at the ETC in Highlandtown — that allowed his company to expand to four full-time employees. It has plans to double in size by the end of 2014.
"Right now, for us it's providing a really critical early-stage office space. The Internet's here, the parking's all established — they take care of all the stuff so we can focus on growing our company," says Schuster, who recently moved from Pikesville to Baltimore, where the rest of NewsUp's employees live. (Schuster was once a digital sales specialist for The Baltimore Sun, the parent of b.)
Of course, there are ETC startups that won't become winners, not to mention the startups — like Yo, the San Francisco "company" that builds an app for messaging the word "Yo" to friends — that defy odds to raise bucketfuls of money.
"It's not my job to tell you that your baby's ugly," says Tillett. "So, if you are indeed willing to pay our fees, follow our rules, be part of our community, and care to move your business forward, it's my job to help you in the best way we can."
And while it might be cheaper to just run a startup business from one's house, there's a significance to being based at the ETC that's difficult to quantify on a balance sheet.
"The companies that go through the ETC are sort of a community, or a market of mentors, for younger companies," says Shelly Blake-Plock, the 39-year-old co-founder of An Estuary, a software startup that creates digital tools for teachers' professional development. "The more examples you have of people who have gone through the process of building a company, which is a really hard, difficult, tricky thing to do, the better the chances that people will try to do that on their own."
In other words, what the Baltimore Development Corp. hoped for in conceptualizing and setting up the ETC in the late 1990s is what has played out in the development of technology startups run by people like Schuster, Gartner and Blake-Plock: A burgeoning technology economy, grounded in homegrown technology companies, has sprung up in Baltimore, pumping up the local economy and bringing jobs and people to the city.
"[The BDC] really had from the beginning an idea that there would be economic benefits to doing something like this," Tillett says, citing an early economic impact projection the BDC made at the time of the ETC's founding that estimated 120 jobs would be created by ETC startups over five years.
"Fast-forward to where we are today, 15 years, over 2,300 jobs that the ETC companies have created," Tillett continues. "So not only did we meet their five-year plan of 120 jobs, but in 15 years — a huge, huge [effect]."
According to a recent report published by the Jacob France Institute at the University of Baltimore's business school that analyzed data on ETC companies from May 2012 through April 2014, current ETC tenants employ 285 people and contribute an estimated $65 million in "economic activity," a buzzword that translates into those companies buying supplies, paying their employees, entering into contracts and making small transactions like picking up a cup of coffee every day.
Nationally, Baltimore has become more recognized as a startup-friendly city, although it's usually lumped together with Washington. A May 2014 list published by the technology news publication CIO.com, using data from the National Venture Capital Association, pegged Baltimore-Washington as the No. 6 best location in the United States for building a tech startup.
"We were ahead of the curve, really ahead of the curve, in trying to create a working environment for small businesses," says Larysa Salamacha, managing director of business development at the BDC. "These companies were already in the city. The objective was to keep them here."
The same University of Baltimore report says 48 of 76 companies that have left the ETC are still in Baltimore. Digital marketing and Web design firm R2integrated — founded in 2007 and based at the ETC's old Canton facility until it moved out two summers ago — now occupies 15,000 square feet on the top floor of a building on Pratt Street facing the Inner Harbor. (The building's facade, once reserved for the name of the shuttered Baltimore Examiner, now bears r2i's logo.) Co-founder Chris Chodnicki says that about 70 people work from r2i's Baltimore office, and that many of his young employees live in the city.
On South Central Avenue, at the border of Harbor East and Little Italy, sits the headquarters of digital advertising and marketing agency Groove. An ETC tenant for three years, the 8-year-old company moved into its current 10,000-square-foot office in September 2013. When it first moved in, Groove had 23 employees; now it has 42, and 80 percent live in the city, says Groove founder Ethan Giffin.
The history of companies such as r2i and Groove is the ideal cycle for the ETC: A startup moves in, spends several years building a business, leaves the ETC only to set up inside its own office within Baltimore's city limits, and makes room for the next startup.
Going forward, Tillett says her strategy is to entice a great number of smaller startups to apply for ETC membership.
Some of this is out of necessity; the ETC, in moving from Canton to Highlandtown, lost 30,000 square feet of office space.
In Canton, it was possible for companies like Groove and r2i to slowly take up more and more office space during their respective tenures, to the point where the inside of the ETC started looking more like individual companies' corporate headquarters. But with a smaller office, Tillett hopes to refocus the ETC toward the little guys, "somebody with an amazing idea, just starting," as Tillett puts it.
After all, at some point, every company is too big for an incubator. Millennial Media has grown so much that it has had to take over an incubator: the former Canton facility of the ETC is being renovated now, and will soon double Millennial Media's Can Company headquarters to 96,000 square feet, says Palmieri, who gave up his post of CEO, but not his ownership, of Millennial Media to work for New Enterprise Associates, a Maryland venture capital firm that has made investments in several ETC companies in the past. His new title is venture adviser.
"This game of cities trying to attract big, old-line companies to move into their town? I don't think that's the economic development game today," Palmieri says. "The future of Baltimore is the future of the numbers of companies that are started and grow in this town."
Step one: Get a desk at the Emerging Technology Center.