Annual Report: Big Companies Techies Can Spin Off From
Adam D'Angelo, an ex-Facebook employee who founded Quora in June 2009, spoke at Y-Combinator's Startup School earlier this year. Photo by Ernest Semerda via Flickr.
Over this next month, we'll continue to expand on each of the items that are to be included in the upcoming "Silicon Prairie Annual Report," which we've described as a "look back at the previous year in the Silicon Prairie region, taking into account such metrics as company formations, product releases and developments, investment and M&A activity, and community building."
Today, I'm going to jump ahead to number four in our "Six Tenets of an Entrepreneurial Ecosystem":
- Culture of Risk Taking
- Wild, Almost Naive Ambition
- Access to Capital
- Big Companies Techies Can Spin Off From
- Universities
- Vibrant Social Scene
Right off that bat, I know that our region will struggle a bit with this tenet. Sure, we have big companies. According to the Greater Des Moines Partnership, our top five are Wells Fargo, Principal, Iowa Health, Mercy Medical and Nationwide. The Greater Omaha Chamber ranks Alegent Health, Offutt Air Force Base, Omaha Public Schools, Nebraska Medical Center, and Methodist Health as Omaha's top five.
The question is, can they help spur innovation? Do they contribute to the entrepreneurial ecosystem in a positive way?
Many of each city's top five fall into the industries I wrote about in our post last week – insurance and financial (see: "Annual Report: Culture of Risk Taking"). They're bolstered on this list by healthcare companies (Iowa Health, Mercy Medical, Alegent Health, Nebraska Medical, and Methodist Health) and government entities (Offutt Air Force Base and Omaha Public Schools).
While these aren't the types of companies that regularly spin off tech companies (see: companies founded by former Googlers and ex-Facebook staff in Silicon Valley in the last few years or even further back in the Seattle-area from Microsoft alumni), it can happen, albeit often indirectly.
(Left: The "what startups founded by ex-Googlers" question was posted on Quora, the site created by ex-Facebooker Adam D'Angelo.)
One example on the Omaha front is Êelios Inc., a technology offshoot of 21st Century Systems, a software company that has grown from defense technology that was refined at Offutt Air Force Base. Offutt, itself, didn't spin this technology out but it wouldn't have happened here if not for the presence of the base.
Here in Des Moines we frequently write about SmartyPig and Dwolla, two financial services startups. While neither company spun out of a local bank, in my opinion, it's no coincidence that the ideas were formed and executed in a city that is known for finance.
I asked SmartyPig co-founder Mike Ferrari about this over a year ago and he said Des Moines is a "hub" for technology in his industry:
I don’t think that people really truly realize the technology hub that we have here in Des Moines through certainly the financial industry and the insurance industry and all the resources that come together here
We'd like to hear from you: Do you know of technology companies that have "spun out" of larger companies anywhere in the Silicon Prairie?
I started this post with the top five largest employers in each city but I don't want to discount other large companies which are more technology or research driven, such as First Data and PayPal in Omaha or Meredith Corporation and Pioneer Hi-Bred in Des Moines. Please leave your thoughts in the comments below.
While you're at it, take a few minutes and nominate someone for an "Innov8 Award" who you know led or has been a part of a startup that spun off from a big company.
> Nominate an individual for an "Innov8 Award"
See our previous annual report posts: siliconprairienews.com/tags/silicon-prairie-annual-report.
ARCHIVED COMMENTS
3, 5 & 6 we got covered in spades. Yes, 3.
In my consulting experience in the financial industry in Des Moines, I can attest that we have 2 and therefore perhaps 4.
We lack 1. We'll get there - the more examples of people taking risks out here and succeeding will compound that impact on the minds of those in 4.
How do we take some of those people out of the "safe" financial careers and propel them into "risky" technology ventures? Good question. I think part of the answer lies in that strong social scene and culture of free ideas. What are the other parts? Not sure, but dammit let's find them.
My current employer, Advanced Technologies Group(http://www.a-t-g.com), is/was a startup from about a decade ago. The two owners and a VP came from Principal to build the company from the ground up.
The process definitely needs to start with people within these larger companies, but to what extent? I'm not so sure we actually need these people to dive into the risk business, but embrace it and bring pieces into their lives. These are the people that could make a heck of a difference by joining forces with an early stage start-up, working part-time, and bring it to life. We need to find a way to harness that love for the community so many Iowans claim they have and apply it to the start-up Culture.
@Kenny Thanks for your comments! Do you have any examples of 1 or 4 that we could note in this year's report?
@James That's exactly the type of company that we're looking for; do you know of any in the last year? Agreed on your other points, as well.
@Geoff -- glad to see you continue the charge on this series. There are some large firms in area that have spun off subsidiaries based on a new business process or technology. Not quite same as spin off new technology independently, nor having a venture capital or R&D arm (invest in relevant technology, good PR, generate jobs for up-and-coming entrepreneurs), but step in right direction.
Another thought is from a certain perspective, a university is a large firm whose research activities generate technology that yields start-ups. So along lines of some thoughts in your post, although firms may not be willing to spin off companies, there's something to be said for cultivating start-ups that are in similar sectors as larger organizations in area (finance, health care, agriculture, defense). That at least may lead to more regional exit avenues for start-ups.