Article Highlights
The garage myth keeps fooling policymakers
Innovation is not a real estate play, and your innovation district is likely disappointing entrepreneurs. Yet cities, universities, and corporations keep pouring millions into gleaming new “innovation spaces” and “hubs,” mistaking glass walls and free Wi-Fi for entrepreneurship. To some extent, understandably; startup folklore inspires us with stories of the innovation spaces of 3M, Xerox PARC, or Stanford Research Institute, or of the garage startups (HP in Palo Alto or Jobs and Woz in Cupertino), but that folklore has been bastardized into the belief that if you just build a nice space, innovation will show up like DoorDash. Too many communities (likely yours), ignore the fact that those innovation spaces became legend because of the culture, people, and programming within them.
A graveyard of “innovation districts”
Support of innovation looks like meaningful attention, relevant mentorship, tested programming driving outcomes, and collisions of experience. If you don’t believe it, look beyond the pretty space and popular event, at the graveyard of empty incubators and “innovation districts” that litter cities, and then look further at the fact that almost all are struggling to find partners, sponsors, and investors, to support the work they hope thrives within.
Such space is as useful to founders as a broken Keurig; nice looking, but no actual coffee.
Events, meetups, and packed demo days are the most seductive of false positives. They look like momentum, they photograph well, and they give economic development officials and city leaders the impression that something meaningful is happening. But activity isn’t impact. It’s no different than bragging about website traffic when none of it converts to sales; vanity metrics that hide the absence of real outcomes. A tour through an innovation hub buzzing with people and branded swag can easily persuade a visiting delegation or justify another grant, but when the dust settles, most of those “wins” evaporate. What matters is not attendance at happy hours or applause at pitch nights, but whether companies actually raise capital, grow revenue, and create jobs. Without that, the hub is just theater.
The core problem is that policymakers and real estate developers confuse inputs with outputs. They think physical infrastructure is the spark, when it’s actually just overhead. Harvard Business Review studies have noted that mentorship is the single most valuable resource for entrepreneurs, outweighing capital (which I’ve also pointed out is fishing in the wrong pond) and co-working space. Innovation happens when knowledge transfers, networks expand, and founders are forced to validate their markets. A building does none of that.
When space actually matters
There are exceptions. Labs and robotics centers matter because they rely on specialized equipment you can’t replicate at home: wet labs, CNC machines, and clean rooms. In those sectors, infrastructure is a necessary catalyst. But the folklore of the startup garage comes from the fact that brilliant partners within a space of their own focused on changing the world; the majority of startups (SaaS, AI, fintech, media, consumer products) don’t need a $40 million “innovation cathedral,” and that $3,000,000 grant your city just gave to a company promising innovation in exchange for property, got taken. What they need is access to advisors who’ve actually built companies, structured programs that pressure-test their assumptions, and communities that foster both trust and competition.
MIT already told us this
The irony is that we already know how ecosystems thrive. MIT’s Regional Entrepreneurship Acceleration Program (REAP) found that successful startup regions require five stakeholders: government, universities, corporations, risk capital, and entrepreneurs – engaged in intentional programming.
Space isn’t even part of the framework – though arguably (or rather, already, and you should be using it): corporations and universities have it.
What governments should be doing is aligning policy and capital with those interactions. That means funding early-stage risk by funding programs, platforms, conferences, and promotion of the ecosystem, so private investors are encouraged to step in because the entrepreneurs are footing the bill when their precious resources are better allocated elsewhere. It means embedding mentorship into economic development budgets, supporting seasoned founders to guide the next generation rather than expecting them to volunteer out of goodwill. It means reforming procurement, so startups can win government contracts and validate markets early. And it means incentivizing universities and corporations to open their doors (labs, data, and distribution channels) as well as their real estate. Ecosystems grow where governments reduce friction, lower the cost of experimentation, and expand access to customers and capital. Everything else is ribbon-cutting theater; and entrepreneurs are waking up to the fact that the theater isn’t worth the price of admission.
Why local leaders keep funding spaces
Real estate is tangible, and mayors love a photo-op in front of renderings. I’m serious, your city is doing it because Austin did it, or whatever city your City Council saw it being done in during an offsite in order to learn about innovation. Because “innovation” makes zoning requests easier to sell. Because universities need donor bait.
The result? Spaces that become empty calories for ecosystems; burning budgets that should be spent on seed funds, accelerators, and mentors.
HP didn’t need an innovation district to get started. Dell didn’t emerge from a capital-intensive coworking space. The lesson of garages and dorm rooms isn’t that scrappy space is the magic; it’s that founders will find a way. The real determinant of whether they succeed is whether the surrounding ecosystem provides knowledge, networks, and capital to scale.
What Cities Should Fund Instead of Co-Working Spaces
I’m not going to let you go after merely complaining; here’s a curated blueprint of infrastructure, platforms, programs, and perks – things startups usually pay for themselves, but smart cities could subsidize to actually move the needle:
- Mentorship Networks with Stipends
Pay actual founders, operators, and investors to mentor startups; even for a few hours a month. Don’t expect generosity – compensate wisdom. Note that to help, this has to be heavily curated to ensure that the mentors are startup experienced and not just consultants in their field. So, is there infrastructure? You bet, why not put Intro or Clarity in place? Government dollars here pay dividends in founder behaviors and ecosystem trust. - Startup Procurement Pathways
Open city contracts to startups by streamlining the RFP process and seeking the solution to the problem rather than a business that meets certain metrics, true pilot opportunities for innovation. That’s what moves the dial: real customers, revenue, and market validation funded by policy shifts. I know, for example, there are technologies available for greater effectiveness in Public Safety, such as putting police in vehicles via video and a smartphone, during a traffic stop. - Global Training Platforms & Community Access
Subsidize access to professionally designed startup tools and assessments. Example: Google for Startups offers founder toolkits; Founder Institute provides structured “Entrepreneur Assessment” and a global network. The Kauffman Foundation calls for building “market infrastructure” like this (not Accelerators) to close capital access gaps. - Technical Stack Sponsorships
Cover essential SaaS and hosting costs: web hosting (e.g., WP Engine), collaborative analytics, dev sandbox environments, or even GitHub credits. Identify the recurring tools that early-stage startups pay for and supply them citywide, getting friction out of the way. - Customer Pipelines via Corporate Partnerships
Facilitate programs where universities or big employers open their supply chains or pilot budgets to startups. As Steve Case once framed it: “Corporations should pledge to source more goods and services from local startups… bettering an ecosystem helps attract talent.” Real money, real validation. - Ecosystem Continuity Platforms
One of the biggest failures in most regions is letting founders “fall out” when they don’t fit one program (which is usually the case). A rejected accelerator applicant often just disappears. Instead, cities should invest in ecosystem platforms that track applications and referrals so no founder is lost. Tools like Startup Space or EcoMap Technologies already provide this infrastructure; offering ecosystems a single database where rejected applicants can be routed to more appropriate resources. This ensures every entrepreneur gets redirected rather than abandoned. - Recognize and Fund Venture Studios as Engines of Startup Creation
Treat venture studios as what they are: operating businesses that generate revenue while systematically spinning out startups. Unlike coworking spaces, studios actually build companies from the ground up, providing teams, infrastructure, and capital efficiency that most founders can’t access alone. Cities should recognize them as legitimate vehicles of economic development and direct civic grants toward covering a portion of their operating costs – structured with impact-oriented milestones (e.g., jobs created, capital raised, startups launched). This isn’t subsidy for rent; it’s investment in a factory for innovation, where public dollars are matched with private-sector discipline.
Want the stack for your city? Intro as a service > Founder Institute assessment and network with programming > WP Engine and GitHub infrastructure > Applicant reallocation with ecosystem continuity -> all pumped through Corporate Partners, Venture Studios, and Procurement
If you’d rather fund drywall and neon signs, go ahead but for crying out loud, stop calling people like me when founders are frustrated or capital isn’t showing up – your impact is just as surface-level. If you’re serious about startups that scale, creating jobs and solving real problems, then wiring these frameworks into your ecosystem is where public funding become breakthroughs. We know how to do it, stop reinventing the wheel because you want it your way. What policy should do: remove friction, fill gaps, and connect dots, not wax poetic about “innovation districts” or being the next Silicon Valley.
Love this! And it’s true. Having been part of several different spaces, the only value was when I actively engaged with others and the relationship was transactional.
Chris and that’s the trap too many cities fall into; confusing activity with impact. A space only “works” when people bring their own network, experience, and intent. The drywall itself doesn’t create that. What you’re describing is what the research shows everywhere: the value is in structured collisions, mentorship, and accountability, not in the square footage (every major city in Texas is making this mistake in some way). The danger is when policymakers see the busy room and assume it’s progress, while the founders inside still don’t have customers, capital, or real traction.
Curious, of the spaces you’ve been part of, were any set up to actually program those interactions (mentorship, customer introductions, accountability), or was it all just left to chance?
Paul O’Brien Hands down Geekdom and @Bunker Labs were the two strongest.
Geekdom was intentional with cross pollination and a mandatory “community giveback”. The sense
of community was part of the “magic”.
BunkerLabs really fostered camaraderie (I think that we were all military) which folks embraced.
Both organizations felt “people centric” and created opportunities on a regular basis.
Chris h/t to Bunker Labs. You caught the news that they joined Syracuse University and Institute for Veterans and Military Families – IVMF? Love it. And yes, fan of Geekdom. I’d love to Get Founder Institute’s platform in both…
https://ivmf.syracuse.edu/bunker-labs/
Paul O’Brien yes! Let’s make it happen. Dax Moreno
We need to put the NO back into “ INNOVATION “
More Fred’s in shed’s creating stuff please and embracing a craftsman like guild of networks, infrastructure, support and community are embedded within
Brilliant as usual Paul
re: Too many communities (likely yours), ignore the fact that those innovation spaces became legend because of the culture, people, and programming within them.
And scarcity – the mother of innovation.
Whatever they needed, they had to find it, or invent it and build it. Of course there’s also Bezo’s making a desk out of door.
But all this confirms one of your fave talking points… Entrepreneurs is a mindset. It’s a lifestyle.
Mark Simchock AND when we appreciate that entrepreneurship is a lifestyle choice, we can understand why it’s actually easy to support them. They’ll solve the problems; we eliminate the burdens.
Paul O’Brien love this! One sees this time and again – government officials and universities love opening start-up incubators and making grand announcements like, “we’re building the Silicon Valley of XYZ”—but most have no idea how to actually build start-ups.
Personally, I’ve been part of three incubators and four accelerators (two of them corporate), and I have to admit, except for two, none had any real idea what they were doing. As you wrote, they thought if they had a piece of real estate, some coffee and doughnuts, and a few “mentors,” then magic would happen.
The reason those two that actually worked stood apart was because:
– They offered real support to navigate early-stage pain points—company incorporation, legals, accounting—the kind of stuff that easily deters first-time founders.
– They brought in actual founders who could relate – and who had both the time and the motivation to guide on teething issues such as customer discovery, MVP development, GTM, fundraising etc. Everyone focuses on fundraising but very few on the former ones because as non-founders, most don’t know how to do that themselves.
– They made a conscious effort to connect founders – not just by hosting passive “networking events.”
– And lastly, when they brought in corporate partners, they made sure those partners were genuinely interested in working with start-ups, not just browsing.
What you’ve described is the exact distinction between theater and infrastructure. Most incubators and “Silicon Valley of XYZ” projects get built for the photo-op, not the founder. Coffee and donuts don’t remove friction; programs and startup experienced people do.
The ones that worked for you line up perfectly with what the research shows: reduce early operational pain points, embed founders who’ve actually built companies, create deliberate collisions, and give startups a path to real customers. Everything else is noise.
The tragedy is that governments and universities keep funding the noise because it’s visible, when the impact comes from the things that are harder to measure but far more valuable.
If more civic leaders listened to stories like yours, we’d see far fewer empty “innovation districts” and far more companies that actually scale; many of us know how to do this, cities need to stop supporting the people who don’t.
Couldn’t agree more with you – but then also, if only more civic leaders were interested in actual long-term impact rather than just short term PR.
Great insights. Thanks for sharing.
Jamie Schwartz I’m pleased I’m hearing more and more cities realize this; they’ve spent the last decade allocating millions to people who promise startups from a building with their brand on the wall and are finally discovering that they accomplished little more than enriching a local business owner who took advantage of entrepreneurs.
Thanks for sharing, Paul. I just signed a partnership with a city in Botswana. Lets pilot this framework as a model for cities in Africa.
Nahid Akter Khan Farhana Akter
Mooketsi love it. Let’s find a time next week to chat.
Great insights here to reflect on as we think about our own community. Missy Braman Elizabeth Lopez, MBA Mike Fahnert Tom Nally
Jamie Schwartz wonderful coincidence! I’m driving through Las Vegas today. Would love to meet but it will have to be next time OR perhaps a call next week to explore some things?
Absolutely and too bad we missed you on your drive! Let’s set up a call. I’ll send you a note.
Paul O’Brien To your point, “If only I had access to a startup hub…” said no entrepreneur, ever. lol
Paul O’Brien p.s. And I’ll continue to beat the drum of “we have to something about the cost of healthcare.” It’s hard enough to look at a kid and say “Mommy / daddy is going to quit their job. I’ll be spending A LOT time working on something new.” It’s nearly impossible to do if mommy / daddy knows healthcare – for the kid – is going to be significantly less.
Individuals / families having to pay for healthcare is like the USA’s federal debt… living in that shadow makes you do things you wouldn’t do normally. In the case of healthcare / insurance Big Inc likes it that way. Keeps more great people “enslaved” to Big Inc.
Mark Simchock we need to loop in Jason Scharf and his community to break that stranglehold we’re all in thanks to healthcare
great analysis and a recipe for moving forward-always enjoy that you don’t wimp out
Thanks for sharing, Paul
Real innovation isn’t built on glass walls, it’s built on founder outcomes.
I agree, but disagree on the missing steps.
What do you have in mind instead?
As I said, great post. I’m in complete agreement with the core principle here, especially regarding the futility of focusing on buildings. But as you asked, here are my two cents.
I see so many social groups, 1Million Cups, StartUp Meet and Greets, financing 101 groups, etc, and yet in my career, nearly all companies that came to me struck in their early idea formation or start-up period struggled with the business, not the network.
While mentorship and networks are valuable, the most critical gap I saw was not in social networking. As we move into the age of AI, the real barrier is the business, technical, and product backbone of the companies themselves.
What’s often stopping a startup from becoming a scale-up are the hard skill gaps: proper product engineering, scalable architecture, backend development, data analysis, product development, etc.
My vision would be to utilize that community funding to establish a collective of vetted, freelance experts in these specific areas. This group could then offer fractional support to the most promising startups—paid for by the community fund.
This wouldn’t just be advice; It’s about funding the “doing” as much as the “connecting.”
Thomas Cox agree with you, which is why I try to (but might have fell short in this case) always say “startup experienced…” when referring to mentors, investors, and advisors.
Too many networks allow real estate investors who pretend to be angel investors, so-called advisors who are really just people running a marketing agency, and mentors because they’re software developers. I find the problem is indeed the lack of meaningful networks in communities but moreover that those networks are usually lacking because the real founders and investors barely engage – because they don’t want to wade through the distraction of people who shouldn’t be there.
Like your idea too. Thanks for clarifying, I wasn’t pushing back on you, I just genuinely wanted to hear where you think I missed the mark. Thank you!
Completely understand. Multiple ideas, especially where there is a little good conflict, are how we break through! Ultimately, we want the same thing!
Thanks Paul O’Brien
This is very inspiring and I like you raise the voice here.
San Antonio needs to read and be aware about this, even though they are more distracted in politics
Saludos
Luis, sounds like we’ll get that on track with Chris pointing out the same thing and looping in Dax Moreno. Most of you know how I feel about Texas; Austin accelerated attention on entrepreneurship and now San Antonio, and Houston (James A. Phelan), College Station, and DFW (Michael Kelly Trey Bowles) should be racing ahead with an orientation to more regional development than cities competing
Great perspective! $10M in the right ecosystem would create far more value than a shiny new building.
Yes after 17 years in VenturePoint Everywhere, Inc. we have learned this is more than just the space, where creativity and innovation mindset has more impact.