David Cummings on Startups

What if the Atlanta Tech Village were Free?

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David Cummings

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In an effort to make the Atlanta Tech Village the best place for entrepreneurs to go to increase their chance of success, we’re always brainstorming ideas to make it better. One idea was “what if the Atlanta Tech Village were completely free?” Of course, it costs a million dollars a year just for things like property taxes, utilities, security, maintenance contracts, and more, not including staff salaries, to keep the building open. Absent the financial questions, here are a few things that might change:

  • Stricter Entrance Criteria – The Village requires that startups have proprietary technology and meet our core values (be nice, dream big, pay it forward, and work hard/play hard). With more demand, entrance requirements could include having a working product, paying customers, or other milestones.
  • Stricter Exit Criteria – Right now, there’s no timeframe on being in the Village and startups graduate out once they have a few dozen employees. The greatest need for office space is in the 2-8 person range, so startups would graduate sooner to ensure room for the smaller firms.
  • Ongoing Metrics Tracking –  Individual startup progress isn’t measured, so there would need to be more focus on metrics and results to ensure that startups not meeting expectations are moved out to make room for new startups to come in.
  • Longer Waiting List – With no cost, demand would grow and a longer list of startups would want to be in the community.

If the Village were free, it would fundamentally change the dynamics and require more focus on results. While the Village isn’t free, we’re continuing to work hard to make it the best place for entrepreneurs to succeed.

What else? What are some other changes that would happen if the Atlanta Tech Village was free for startups?

Comments

5 responses to “What if the Atlanta Tech Village were Free?”

  1. stephenfleming Avatar
    stephenfleming

    “Never, ever suggest they don’t have to pay you. What they pay for, they’ll value. What they get for free, they’ll take for granted, and then demand as a right.” — Lois McMaster Bujold

    Reply
  2. Josh Austin Avatar
    Josh Austin

    Wouldn’t this make it more like Y-Combinator? I don’t think that’s a bad thing, but wouldn’t ATV need to take an equity stake in the companies incubated there? How would it stay open otherwise?

    Would parking also be free in this scenario? 😉

    Reply
    1. Carl Avatar
      Carl

      It could stay open the way many VC firms (few of which actually make any money) stay open: through risk-seeking investors and grants. Neither of those categories of supporters require a return, so it’s ok that they almost never get one.

      In this context, taking an equity stake isn’t a business model. If there’s ever a return, it’s years down the line. ATV would have to start taking lots of equity stakes immediately, and then they’d have to maintain their pricing model for many years.

      Since ATV isn’t providing much compared to, say, a $1M round, they’d have to take small stakes in low-valuation/maximum-risk companies, or they’d have to take microscopic stakes in high-evaluation/high-risk companies. (Note that there’s no “low” or even “medium” risk option. We’re talking about startups here.)

      The numbers just wouldn’t work out, especially for an establishment with costs exceeding $1M/year.

      Reply
  3. Pritesh Patel (@priteshpatel15) Avatar
    Pritesh Patel (@priteshpatel15)

    A couple of thoughts:

    1. If it were to become competitive to enter and stay there, it would counter the “Be Nice” philosophy.
    2. Being completely free would lower the value of commitment to the startup.

    I believe paying for space is already a happy medium to balance pressures between competition and collaboration which I believe is important to have a healthy community. Its still competitive indirectly because someone has to fund being there and funds are limited (at a high level). Collaboration still exists (i.e. “Be Nice”) because direct inner competition doesn’t exist to be housed in the village and to stay in the village.

    If the concern is that space is running out (wild guess), how about just grow it further to other locations (I’m sure not easy though). This would play well with the ATV mission of continuing growth and fostering a larger entrepreneurial community to make Atlanta a top 5 Tech Startup Center in the U.S.

    But then again, I’m just learning …

    Reply
  4. Carl Avatar
    Carl

    I think stricter entrance criteria is a great idea, and you should do it regardless of ATV’s price.

    My experience of the ATL startup scene is that it’s absolutely full of wantrepreneurs. That might be true of all startup scenes, but it definitely decreases value wherever it’s true.

    I used to go to networking events, and almost everyone I met said some version of the same thing: “I have this idea. It’s really cool. I want you to build it for 1% equity (i.e. free). I have no savings and can’t/won’t quit my job. I’ve been working on this for 2 years.”

    If there were a space with zero of these people and, ideally, lots of people who have demonstrated that they can get from $0 to $1, it would make ATV a place I’d really want to be. As of now, I’m happy to sit at home or in coffee shops and selectively meet people when I can.

    Reply

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