Mass Challenge, a Startup Renaissance?

Mass Challenge, a Startup Renaissance?

Today, Mass Challenge joined the Center for Civic Media for lunch. My notes here form an extended record of our conversation. A great summary: "Mass Challenge at the Center for Civic Media," has been written by my Media Lab colleague, the entrepreneur and engineer Travis Rich.

Can the big challenges facing our world be solved by entrepreneurs? If so, then what kind of community might be needed to coordinate the resources, ideas, and connections required for large-scale, big impact initiatives?

Today, we had a visit from Karl Buttner, Jeremy Bersin, and Warren Anderson of MassChallenge, a $1M global startup competition and accelerator program that aims to catalyse the launch and success of high-growth, high-impact new businesses.

Mass Challenge is trying to "catalyse a startup renaissance" by connecting entrepreneurs with the resources they need to make their work go forward. Entrepreneurs are drawn to Mass Challenge through their million dollar business competition, but the ultimate goal is to build a community of support. It's a pretty new organisation, having started in 2010. They grew significantly in their second year, and they're currently planning their third year, which they expect to be yet larger.

Mass Challenge sees themselves as distinctive from most incubators and accelerators for their scale, community, diversity, and mission. Instead of working with a few companies, they work with hundreds of companies at once. They do this by involving a large community of mentors in all parts of the process, from working with supported businesses to actually deciding who wins the funding prizes. They also aim to be more inclusive than most startup accelerators, inviting participation from companies anywhere in the world and in any sector. Finally, building a healthy startup community is their core mission. Other accelerators expect to make profit by taking equity in the startups they support. Mass Challenge has chosen to be a nonprofit and doesn't take equity at all.

A year in the life of Mass Challenge starts in November, when the core team secures partners and develops their plan fo the year. In March, they launch marketing for the million dollar prize competition. Once the application deadline has passed, they hold two rounds of judging in April and May and announce the companies which will get mentorship and accelerator services from Mass Challenge. At that point, orchestrating the dance between mentors and finalist companies is one of the most important and tricky parts of this process. From June through the end of October, finalist companies participate in the Mass Challenge community, using the space, interacting with each other and receiving support from their mentors. The teams are also competing for their share of the million dollars in startup prizes. At the end of October, the Mass Challenge mentors decide how to distribute the funds. In 2011, three teams took $100k and four teams to $50k.

What do finalists get out of Mass Challenge? The hub of activity is the free office space they offer near the Institute for Contemporary Arts in Boston. In this space, they offer public events and training, which are often broadcast to the web via Mass Challenge TV. The mentorship scheme puts finalists in touch with advisors who can also connect companies in touch with funding and other resources. The Mass Challenge team is intentional about including people from government, investors, nonprofits, and any other sector potentially relevant to business. In this sense, Mass Challenge is cultivating a large scale ecosystem for the resources and relationships needed to make a business successful. A few of the finalists win the advertised prize money, but in many cases, finalists are connected with forms of support which more directly match their needs.

Might Mass Challenge be helpful to your startup? Any type of business can apply from anywhere in the world (nonprofits, health, retail, products), so long as you meet the basic requirements. There isn't even an age restriction!

Cultivating this broad community requires a lot of work, especially since Boston, Cambridge (US), and the broader world now have an overflowing range of events and opportunities for startups. Marketing within the Boston area is challenging enough; marketing to the world is even harder. Soon, they will be recruiting for an ambassador programme which invites a growing number of trusted people to advocate for Mass Challenge throughout the Boston startup culture. This intentionality about diversity is paying off. Their first year was heavily weighted towards high tech companies. This year, applications came in from 24 countries and 34 states. They now have much greater involvement from a broad range of company types, including many more retail companies, nonprofits, and social companies.

Two things seem essential to achieving of the Mass Challenge vision: marketing and coordination. Both are made particularly tricky at the scale that they operate. On the marketing side, they are trying to use realtime video to connect a wide community of interest anywhere in the world. Video interviews also provide opportunities for startup participants to reflect on their practice, while also presenting a drama from which online observers can learn. Mass Challenge is also trying to use video tutorials to share the output of the ideas coming out of the "petri dish of information" they have tried to create.

Coordination is difficult at such a large scale. Consider for example, the ambassador programme. Mass Challenge is far too large for them to recruit hundreds or thousands of programme ambassadors on a person to person basis. So they have created an online quiz which checks to see if a prospective ambassador knows the basics. If you can demonstrate that you understand the vision and details of Mass Challenge, you can become an ambassador!

Mentorship relationships form the central coordination task in Mass Challenge. This starts at recruitment. While they make an open call for mentors, they also find them through people's existing business relationships. Sorting through mentor applications can be a challenge, and they're really worried that as the number of mentor applications increases, they might accidentally turn away great people. Once mentors are recruited, they use software from Luminoso to pair mentors with teams. The software presents teams with a short-list of potentially interesting mentors. Teams and mentors can then meet up at specially-orchestrated mentor-matching events to decide if they want to work together. This combination of recommendation software with mentor-dating events has been a great improvement from the first year, where teams were asked to decide from a befuddlingly-long list of all possible mentors.

During the event, someone asked Karl why Mass Challenge is not a for-profit organisation. This has been one of their distinctive core principles from the start. According to Karl, they want to focus on giving things to entrepreneurs rather than just taking. The phrase John Hawthorne, their CEO, uses is that they're focused on value creation rather than value capture. Their philosophy is that everybody benefits when you give things rather than take them.

My colleague Rahul here at the Center for Civic Media asked, "why did you decide to start big?" According to Karl, "scale is a core part of what we're doing. On one hand, we think it's good to bring the benefits of accelerator programmes to lots of people. Large scale acceleration is able to bring in more investors and corporate participants. Investors can visit Mass Challenge to meet with a large number of companies rather than having to meet with dozens of smaller scale."

Sasha Costanza-Chock then asked about diversity in Mass Challenge: "Boston became a majority people of color community in 2008. Unfortunately, women and people of colour often don't historically have access to the same resources as white males. Does Mass Challenge keep diversity data? If so, that's awesome and how is it looking over time, and you should totally do that." Karl answered: "That's one of the wonderful things we believe Mass Challenge is doing. Online judging is a completely blind process. If you can break into the programme, then you have full access. It's no longer an old boy's network; it's the Mass Challenge network."

When asked how things are actually working out, Karl responded that of the companies in Mass Challenge this past year, over 40% had at least one woman founder. That's almost double from the first year. He pointed out that success in diversity comes back to marketing, and that they're trying to be as broad in their marketing as possible. I would love to see how many people of colour are involved, and what impact might result from deliberately recruiting a diverse range of ambassadors and mentors.

Finally, Ethan Zuckerman challenged a fundamental assumption many of us bring to the startup world: that high concentration of companies is a good thing: "Let's ask about this? Will it help to put everyone together?" He pointed out that the startups he ran were all based in towns with less than 10,000 people. He then asked them, "How do you know when you're winning? How would you compare the success of your companies to a random group of companies? How do you compare your success against a highly picked group of companies?"

Karl acknowledged that this is an important and difficult question to answer. Nevertheless, the first year's class of startups have hired over 500 people and raised over a hundred million dollars. Anecdotally, many of them say that they got their funding or found customers or ideas through Mass Challenge. Also, a lot of startups flounder before they get to Mass Challenge, so it's fair to think that the Mass Challenge experience was a critical part of their success.

Ethan then wondered if Mass Challenge could ask more established Angel investors what their expected rates of success are, and compare their programme to the angels: "I'm not trying to suggest that you are damaging businesses. But if you're encouraging businesses to be metrics-based, you might want to apply metrics to your own success. It would be nice to put on the table facts to back up your hopes."

Like Ethan, my experience is entirely outside the world of incubators and accelerators Nevertheless, I'm intrigued and inspired by the bold vision and innovative techniques applied by Mass Challenge to cultivate entrepreneurship in Boston from anywhere.