Space Matters: Why is Startup Accelerator Space Important?

PUBLISHED December 9 2010
Note from Enrique Allen: The following article is written from an environmental perspective that 500 Startups is a "meta-startup" ecosystem and startups are the primary customers we serve. My personal evidence over the last three years is based on experiences learning and teaching classes at the Stanford dschool and helping design other "accelerators" like Facebook's fbFund REV and Venrock's Quarry. I'm writing this as we build our first iteration of 10k sq ft in downtown Mountain View and actively test how entrepreneurs respond to spaces with the help of many collaborators.[shoutouts] Please share feedback, especially case studies, hacks and data from entrepreneurs like Dave Schappell's post!

One of the most basic human needs for startups is space- both physical and increasingly digital spaces too. As companies evolve, it's natural to look for "office space" and carve out a location to flourish in clusters like Silicon Valley. But why is space important to accelerating the probability of early stage startup success?

Long story short if you don't read much: space matters because it can set the optimal context for resource-based variables to 1) accelerate the collision between great ideas and people 2) influence company productivity, community & learning 3) form a platform with network effects.

Space design is just one instantiation of my focus on spreading design thinking-doing at 500 Startups.[design] Watch this ~1 min video to get a sense of our space design process and don't get your hopes up too much - we building our space on a lean, early stage startup-centered budget to look unfinished and reinforce our culture of prototyping while preserving flexibility for iteration - not for Architectural Digest.

Now for those whose who want to read further...
To start off, I'm beginning to make a case about why space matters in setting the optimal context for early stage startup acceleration. Success outcomes for an early stage startup participating in an accelerator can mean raising more funding, hiring key talent, and finding product-market-fit.[accelerator success outcomes] Each outcome has associated market driven performance metrics that we are tracking to compare with other accelerator-likes.

There are many factors influencing these success outcomes for early stage startups and it's hard to tell which ones really make a difference in the long run.[success] Accelerator, incubator, coworking, and other hybrid models are bubbling up all over the world to support entrepreneurs by manipulating a combination of resource-based variables such as funding, the accelerator-like team, mentorship, services, education, tools, sponsors, events and space.[resource-based variables] Think of these as external value multipliers. I'll be continuously sharing experiences and experimental evidence about each of these resources to 'prove' they're positively correlated with success outcomes via company proxy variables like productivity, community and learning.[company proxy variables] Think of these as internal outcomes for each company during the acceleration time period. Hopefully we can develop models for experimenting with these variables together and ultimately help build better companies more efficiently to solve important, meaningful problems, so again, please share your results!

Productivity, as an example proxy variable or antecedent to success outcomes, simply represents your ability and motivation to "get shit done" in the space that actually makes an impact. In other words, productivity is "the efficiency of achieving validated learning, measured by actionable metrics and speed through Build-Measure-Learn loops."[Eric Ries] Depending on acceleration time frame, often around 3 months, think about how many closed deals, life long connections, and MVP experiments etc. you can make in an incubator space (while avoiding too much distraction) versus if you're just on your own hacking in a coffee shop? Spaces therefore should be designed with the intention of improving variables like productivity to "fuel the creative process by encouraging -- or discouraging -- specific behaviors." [Scott Witthoft] This line of reasoning may seem obvious because it is. But what's lacking is clear intention and consciousness behind startup space design and the myth that if you build a great coworking building the rest will magically come together. Most spaces are architected without the point of view of startup entrepreneurs and their specific needs at the early stage. As an example, Eric Ries pushed me to draft hypotheses (albeit with lurking variables and weak conditionality) about how space affects productivity. I'll be looking to falsify these in future posts and I encourage you to as well.

Below are a few points to consider about how space connects resource-based and company proxy variables together to increase the probability of accelerator success outcomes.

1. Innovation originates in spaces that accelerate the collision between great ideas and people.

Although you may think of the solitary genius, or lone hacker toiling in his garage, go back in history and look at coffee shops like the Grand Cafe that helped spur the Enlightenment or Parisian salons at the forefront of modernism. Innovation occurs simultaneously not just from profit motives: it comes from creating environments where ideas can connect. Startup accelerators provide a space where ideas can mingle, swap, and create new forms- the basis for creative breakthroughs.[Steven Johnson] With enough colocated brilliant entrepreneurs from different backgrounds hungry for change, you're bound to stumble serendipitously across amazing new info to build upon, increasing the probability of aha moments and "idea sex." Fundamentally, you want your team forming new networks of neurons firing in synch and need to put them in environments where these new networks are more likely to form. In this sense, space is kind of like glial cells. Without going too much farther in the weeds, if you really wanted to measure this seemingly intangible benefit, just start counting all the great productive ideas and relationships that form in an accelerator space versus when you're on your own.

Furthermore, when you're at the early-stages still validating a lot of assumptions and prototyping your path to product-market-fit along the perimeter of technological options, you want to solve problems in unique and special ways FAST. A true hacker finds the process of problem solving exciting and interesting, but needs time to look at the problem in multiple ways. So why not put be in proximity to other hackers, mentors, and service providers who can potentially accelerate the development of many more great ideas for solutions? Not to mention these trustworthy folks who work near you for weeks are more likely going to be able to find and attract the right hire you need unlike some recruiter who annoys people and really doesn't understand your vision.[diversity]

Similarly, entrepreneurs need a place to show off their work to raise capital and investors need to visit the best spaces for discovery. As an entrepreneur, if you're trying to raise additional rounds of funding, you need intros, tips about investors with the highest probability of transferring you money, and a community that has your back to say the least. Obviously there's nuances to fundraising depending on the stage, but for seed, bridge rounds in between, and Series A, there's no better place to collide with potential investors than in the right accelerator spaces. The amount of top angels and VCs I've seen in our space in just a couple weeks is easily 10x greater than what you'd get in your own place. For example, if an investor comes in and I think you should meet them, we'll drop by your desk and say hello which is much more efficient than endless email. Don't worry we won't let investors creep around uninvited and it's not a zero sum game, there's enough money to go around if you're truly doing something innovative, it's more a problem of startup-investor fit. The community of other 500 Startups entrepreneurs and mentors are great people to help solve that because combined they know nearly everyone in the Valley and will help you get the best deal... Accelerator spaces (even without events like dinners and demo days) create opportunities for entrepreneurs and investors to meet that would otherwise not happen. Like I said before, we got to start measuring the impact. I wager that the amount of investor leads and deals you close that originated from participating in an accelerator is greater than what you would get on your own on average.

So, don't think of great ideas and people as self-contained things in your own company closet because they’re more like ecologies and networks.[Kevin Kelly] Especially in the early stage when you're trying to figure out your path, put yourself in spaces where resources collide with your company in positive ways and lead to more successful outcomes.

2. Intentional accelerator space design can influence productivity, community & learning.

Space matters because "creativity follows context."[George Kimbel] If you want to influence the behavior of startups in a certain way, you obviously need to design for that. For example, do you notice that feedback and energy in a meeting can be affected by something seemingly trivial like the type of chair, sofa, stool etc? I bet you'll engage differently with an entrepreneur while reclining in seat across a fancy board room table versus sitting actively on a bench in front of a white board.

But what does it mean to set the right context to get all those great ideas and people to collide? That still sounds a bit too fuzzy. Below are few concepts to consider as you think of context as an interaction problem.

Location: Simply put, where are the behaviors you care about occurring? From a macro-level, it can start with the city you're in. Although many of my friends and startups are setting up in San Francisco (I'm from the Bay Area) and it's a great city especially if you're young, hip and looking to meet new people, it may not be the best location for your first few months as an early stage startup in Silicon Valley. During an acceleration period, the most important thing is productivity. I'm not saying to stay up all night, not sleep or socialize but to have intense focus on validating that your company should exist and be around other people who are striving for similar goals. The kind of pressure I want from our space is to hack productively, creatively and radically collaborate while developing deep relationships and having healthy fun- not constant temptation to go out and spend the little money I have around people that don't understand startup life. Don't take my word for it, just ask other early stage entrepreneurs who live in San Francisco who work nearly seven days a week and barely take advantage of the social aspects of SF while they live in an expensive tiny place that get's no sun. We picked our first home in downtown Mountain View because it's proximity to a community: VCs, major platforms like Google/Facebook/Apple/Microsoft, Stanford University, blocks of cheap food-coffee-tea options, access to public transportation, and affordable living options. Long story short, we want to be closest to the epicenter of funding, top talent, partners for distribution, and cheaper necessities to help you get traction. The location of our 500 Startups community "is interlaced with the larger community in which it is located." [Christopher Alexander] From a micro-level, within our space, there's a ton of things to consider about the location of certain elements but I'll save that for another post specifically about space layout.

Activity: Context fundamentally arises from activity.[Paul Dourish] There are different types of activities associated with common work scenarios we call "i-time", "little-we", and "big-we"? As a result, our space design should facilitate these scenarios or at least not get in the way. i-time, aka individual, heads down, "get shit done" mode is one of the most challenging things to design for given so much individual variability and the difference between makers and managers in early stage startups.[Paul Graham] i-time to work on serious problems and really think clearly is increasingly under threat with all the buzzes, beeps, and task switching that may be making us "dumber" so to speak.[Clifford Nass] Theoretically cubicles and private offices solve for i-time until people start to kill themselves, fight over hierarchy and compromise face-to-face time. Well designed accelerators on the other hand can enable your team members to bounce out to a variety of private spaces like focus "monk" rooms where they can jam for a given period of time and shelters they can customize so people don't feel confined to only one place. Try it out yourself and give people control to manipulate personal space, just like software, and if enough people do something they're asking for a change.

As you observe people behave, think of re-occurring work dimensions or patterns that we often bounce around to and from including: intense focus to procrastination, private to public, formal to informal, quiet to loud, in-the-machine to out-of-the-machine. There's a lot more to discuss here but I'm trying to avoid writing you a novel because people barely read more than 140 characters. Again to drive home the connection between a resource-based variable like space and a company proxy variable like productivity, I'll talk briefly about the designing spaces to foster a range of intense focus to procrastination.

"You probably only have to interrupt someone a couple times a day before they're unable to work on hard problems at all."[Paul Graham] I take this to heart as a designer because I often need around a four hour chunk of time to really become immersed and produce high quality work but I'm constantly getting pulled in multiple directions by requests, emails, notifications, meetings and more. It's essential that accelerator teams are mindful of the risk of too many distractions from visitors, events etc. (or recognize that entrepreneurs are just making excuses) and work with the community to set norms about behavior in certain spaces. In our case, the East side work area for i-time is nearest the elevator where the most traffic comes from. So not only do we need to use doors, carpeting, and signage to drive people towards the cafe area where little-we and big-we activities go on, we must reinforce the norm by having an orientation when new companies join the accelerator, providing noise cancelers and encouraging people to call each other out if someone is becoming too disruptive. This is just one of many issues to consider, so please share how you design space for different work scenarios and dimensions.

Visual Awareness: tuning into what's happening around you, processing info through peripheral channels to keep up on-going knowledge of others’ locations, activities etc is natural. Think of scanning when someone walks through the door or noticing a new tweet in the background. Benefits of high awareness include improved coordination, rapid info sharing, increased observational & tacit learning but there's costs like the loss of privacy, distractions, interruptions & noise. [GSA] Accelerator space can magnify potential awareness of important learnings that you would otherwise miss when you work alone (eg breakthrough progress from other teams, startup trends, educational events, mentor office hours) by giving you visual clues into how successful teams work, ambient displays of inspirational information, and designated zones for visitor interaction.
As an experimental anecdote, during construction we moved temporarily to the 9th floor which was designed with all private rooms that had just enough room to house a startup. I noticed immediately that people went for the "best" rooms based on views, sunlight, access to exits etc. and started "nesting" and closing their doors. As expected there's a startup tendency to get their "own" space and privacy with four walls so they can begin developing their own culture. While this was a good thing because people were able to "get shit done", the space layout of the 9th floor significantly hurt community activities because their was little visual awareness of everyone else. To my surprise when we moved back to the 12th floor, companies started introducing themselves, meaning that after nearly a month of working in the same space, they still didn't know each other! So as a take home lesson, find a balance between giving companies privacy and props as well as exposing them to each other so they can collide. "Workplaces must not be too scattered, nor too agglomerated, but clustered in groups of about 15...Group in strongly identifiable communities. The communities need to be small enough so that one can know most of the people working in them, at least by sight- and big enough to support amenities." [Christopher Alexander]

Another space tip to consider is making artifacts visible in shared spaces to promote learning. Stone Librande, Creative Director of startup-like teams at EA, gives a great a lecture on how he begins designing games by making paper prototypes and board games to work out the mechanics. He places them in common areas where people are provoked to interact with them everyday, stimulating new associations- the neurological basis for creativity. [KM Heilman et al] Similarly, in the Stanford dschool we practice a method of space saturation, where you unpack thoughts and experiences into tangible and visual pieces of information that you surround yourself with to inform and inspire designs. You do this in a shared space where everyone can see the same mental model, again to increase the probability of "aha" links and reduce all coordination costs of digital communication and confusion we encounter laying screens on top of screens. "As you walk along, you can see what others are up to, and perhaps contribute an idea to somebody else's project." [Scott Doorley]. Furthermore, there's research that shows these sorts of behaviors in "war rooms" can actually double people's productivity. [S Teasley et al] No wonder both Twitter and Facebook had short-term war room spaces for teams working on latest new releases. Long story short visual cues in accelerator spaces should move you towards interactions that promote the success outcomes you want to achieve.

Availability: what, how and when you want to interact with others. Availability is tricky because it's a continuous process of negotiating what you want to be aware of and how visible you want to be to others at a given time. Common behaviors you see in startup work spaces are people closing their door, putting on headphones, pulling down blinds for i-time. But what I'm advocating for is having even more intention about how space signals availability and associated behaviors from the structural to furniture level.

For example, we believe that little-we and big-we spaces are often where community connections get formed. We intentionally blew out walls and created a large non-persistent, multi-use area directly connected to our cafe for visitors, folks like our resident mentors, and events. The furniture in this space is even more flexible, reconfigurable and meant to signal that you're more available to talk than at your workstation. "The system allows a modal shift between intimate and open." [Scott Doorley] Think about where people naturally gather and walk, like animals around a water hole, and leverage these patterns to foster more serendipitous interactions. Find ways to get people talking during transitions in public spaces, the optimal context for casual interactions versus unexpected interruptions near work stations. Entrepreneurs often act so busy they don't have time for anything when in reality they sometimes should be making time to get outside of their insular bubble- so design spaces where that more naturally can occur. Our North side is "the common piece of land within the work community, which ties the individual workshops and [companies] together." [Christopher Alexander]

3. Spaces form a platform with network effects

After a few acceleration batches, our space will be a platform for startups to grow like a two-sided market connecting talented entrepreneurs with an ecosystems of investors, partners and more... For the time being, it starts with eating our own dog food and getting through as many build-measure-learn cycles in our space. We're combining lean startup and human centered design methodologies to show that space brings together resource-based variables that influence company specific proxy variables and ultimately accelerator success outcomes.

In closing be mindful and aware of your space, find empathy with the humans you care about, make some hypotheses about what really matters, build prototypes, test them, and measure the results to extract learnings, then rinse-repeat like you would with software. Although the brutalist structure at 444 Castro St may represent an artifact of  the "spiritual, intellectual, and moral deformity" of previous Internet bubble implosions [Dog City], our intention is to reclaim the space with the networked resources and positive energy needed for entrepreneurs to tackle meaningful problems in more efficient and creative ways.

Scott Doorley, Scott Witthoft, & Michal Kopec (Stanford Environments Collaborative)
Jim Merryman (Facebook)
Primo Orphilla, Denise Cherry, & Kroeun Dav (Studio O + A)
Steven Gerten, Tamara Larson, & David Meckley (Huntsman)
Amit Wadhwa (AWA)
Ed Howard (Steelcase)
Mike Drez (OneWorkplace)
Tina Lee & Dave Denny (InsideSource)
Rob Englert & Grant Meacham (D-Build)
Josh Alfaro, Volpentest, Travis Lee & Danny Chavez any many more (Novo Construction)
Deborah Boyer, Maria Damato-Jay, Patrick Flynn, Marianella Guandique & more (Swigco)
Rod Scherba & Sam Warburg (CC & Carey)
Marc Pacaldo, Matt Stoltz, Orion Lakota & Luke Dillman (143 Garage Team)
Shuqiao Song & Carey Lee (Stanford dschool)
Tim Pacaldo, & Lisa Carroll

[Design] can be everything- a big realization for any designer. My biases stem from Stanford University sources of human-computer-interaction, persuasive technology, and product design. From my viewpoint, design is a holistic, re-combinatorial, human-centered process that can reliably produce innovative solutions to nearly any challenge. I envision design thinking to be the glue that binds our startups together in our space. From a more practical perspective, we integrate lean startup and UX design methodologies that are actionable to entrepreneurs on a tight budget with a need for speed.

[Accelerator Success Outcomes]
More Funding: You can fundraise more effectively by joining an accelerator that draws the attention of investors to one place versus spending months knocking on VCs doors.
Hiring Key Talent: Attract a hacker culture with brilliant people and/or be around other awesome folks in a space who inspire and motivate you.
Finding product-market-fit: "When a product shows strong demand by passionate users representing a sizable market." Basically at the end of an acceleration period can you prove: 1) The customer is willing to pay for the product. 2) The cost of acquiring the customer is less than what they pay for the product. 3) There’s sufficient evidence indicating the market is large enough to support the business. See the Entrepreneur's Guide to Customer Development and Startup Lessons Learned. We're lucky to have the thought leader sources of the lean startup movement as mentors, advisors and investors.

[Success] is highly subjective but is directly tied to a startup's ability to create wealth. It's important to note that while achieving Google gorilla status as a sustainable publicly traded company is home run level success that many entrepreneurs and investors aspire to but there are inter-mediate success outcomes specific to early stage startups and their purpose for participating in accelerator-like models.

[Company Proxy Variables]
Productivity: your ability and motivation to "get shit done" in the space that actually makes an impact. In other words, productivity is "the efficiency of achieving validated learning, measured by actionable metrics and speed through Build-Measure-Learn loops."[Eric Ries]
Community: I'll save in-depth discussions of community for another post. Basically, does a company participating in an accelerator space find meaningful belonging and dare I say, real friends, collaborators, and other tribesmen who go out of there way to help without always an expectation of immediate return.
Learning: This is part of productivity, however, there are other potential learnings around design, data, and distribution that may be super valuable but not directly incorporated into your product eg you learn how to avoid common entrepreneur pitfalls or things like useful SEO hacks without applying them during the acceleration period. I think learning is one of the key differentiators that accelerator/incubators of past failed to realize. Why spend ~$200k+ on business school if you're trying to become an entrepreneur? Go get seed funding from an accelerator and learn by doing.

[Resource-based Variables]
Funding: Some companies participating in early stage accelerators are still closing their first seed round, some are looking for a bridge and others are getting ready for series A or even B.
The accelerator-like team: Ignore all this unnecessary PR about "super' angels and what not. The reality is Silicon Valley is a bit like Hollywood, where there are stars that attract the best talent and a supporting cast to make it happen. Dave McClure is an up and coming star consistently listed among the best and we have a well rounded team to support your needs.
Mentorship: There are many models for structuring relationships between early stage entrepreneurs and those who've been around the block. In order to scale we've intentionally recruited over a 100 mentors with operational background that can help you execute and avoid dumb mistakes. Look out for improved mechanisms for facilitating startup-mentor relationships.
Services: This can mean a wide variety of things like legal, finance, admin back office, IT support etc. that accelerator/incubators traditionally provided to remove friction from starting a business and relieve founders of distractions like errands. While it's important that entrepreneurs know how to start a business from scratch and not make legal blunders, our focus is on services that augment design, data, and distribution. Personally I'm leading, and most excited about the development of scalable design resources for our early stage startups.
Education: This can be everything from ad-hoc meetups to lectures and even formalized curriculum. At fbFund REV, we over-delivered on this and setup so much content that people couldn't even consume. Although we'll tone down the amount of education at 500S, I think the most important outcomes from educational resources is inspiring and reinforcing learnings around replicable design processes and a shared vernacular that companies can use to better communicate.
Tools: Anything from the calendering software that Paul Graham wrote to infrastructure platforms like Twilio that other 500S companies can use to be more productive. There's a TON of innovation here without creating too much of an echoing chamber.
Sponsors: I'm looking for sponsors who can hook us up with super useful things like screens, furniture, healthy food, equipment, hosting and more. We have deals we'll soon be announcing that are geared to make lives of startups better.
Events: They can be related to the variables above or more social in nature meant to bring the community together. You can count on a big demo day where you'll have the opportunity to present to who's who of Silicon Valley. But we'll also host both large public events like WarmGun and smaller invite only events like InboxLove that help promote your company and expose you to the right people.
Space: Obviously you can work in your room, in a coffee shop or under a rock and if you want it enough, you can get it without accelerator/incubator drop-in, coworking or dedicated spaces. Either way, hopefully I'm helping you realize why space matters and succeeding in at least persuading you to intentionally re-arrange something in your work setup.

[Diversity] is part of the secret sauce of innovation, especially when extremes collide on the edges of expertise, philosophies, background, eg The Well. At 500S we are radically collaborative and attract brilliant entrepreneurs from all walks of life both locally and internationally. Just look at our portfolio and follow Dave's traveling tweeds- few early stage funds even come close to our diversity.