The Entrepreneurial Accident
Our great architect-as-entrepreneur experiment started out by accident. The genesis of Project FROG, arguably the nation’s leading clean modular building technology company, arose from a desire for a bit of PR.
In 2005, we met with the publishers at Metropolis magazine regarding the suitability of our firm’s work for a high profile issue on education. The increasingly glazed look of the editor indicated that my pitch (for a story about what I thought were the most exciting architectural projects the world needed to know about) was not working. With the tone of her “Got anything else?” I knew I was running low on options. I ventured, “There is a more confidential assignment that we are working on…but it has never been shared.” The editor looked up and leaned forward. “We have been working on the problem of 300,000 classrooms in the US, and we have a prototype that looks like this (sketched furiously on a hotel stationery pad).” She was in, granting us good coverage if we published with them first. The only problem: we had no images, only basic research, and a bit of brainstorming by the office over beers on a Friday. We had thirty days before the reporter with a deadline was to visit our office.
The resulting article brought attention and inquiry from around the world. We were excited. We dodged, bought time, researched, and sketched more. The New York 2012 Olympic Committee called, we sketched a bit more. Then came the tsunami in Indonesia followed a few months later by Katrina, and we realized that we were in the center of a global problem with no viable solution.
Transforming Concept into Company
In 2006, we realized that we were well out of our safe range. Fortunately, we reached out for technological and business advice. On the technology front, our saving grace was the connection with two brilliant Silicon Valley talents: Manley Tantuico, an industrial designer, and Bekir Begovic, a metal fabricator. After they recovered from their amusement at our overly complex architectural approach, they patiently explained the obvious benefits of an industrial design approach: strive for a clean, simple, and repeatable solution made of as few distinct parts as possible, then organize the product into pieces, parts, components, and assemblies. Though obvious to an industrial designer, this was revolutionary to us. Soon to follow was the introduction to relevant software tools that support this methodology.
Financially, we were in even more foreign territory. The “problem” (i.e. the Market) we were addressing was large. We had a mission supported by the passion of some very talented creative minds. But we had the financial capabilities of a modest-sized, first generation architecture firm. So we did what came naturally to us: we sold units. Within a few weeks, we had two big contracts to build two campuses using our system. The problem was that we had quite a few product elements to finish, very tight project schedules, and understanding yet demanding clients.
We were able to capitalize a new company through a seed funding round of investment capital from a close network of friends, family, and associates. We recruited a very small business team and survived the completion of the first round of contracts. We hung on and were able to raise a large round of funding from Rockport Capital Partners, a Boston and Sand Hill venture capital firm, just as the fall of Lehman Bros marked the country’s decent into recession. I awoke to find myself the CEO of a venture-capital-backed company. The real estate market was collapsing, and we needed to get down to the business of creating project confidence and acting like a proper, growth-oriented, commercial enterprise. My vocabulary had to expand quickly beyond the realm of building to include “liquidation preferences,” “option pools,” “exit strategies,” “pipeline,” “venture debt,” and “optics.” I had to take a Myers-Briggs test, have “key-man” insurance, and see legal fees approach 10% of our annual spending.
We were in a brave new world, but the achievements were compelling, and the enthusiasm of the staff was motivating. Our belief was that we could change the way buildings were built. Energy consumption would drop 40%. Projects could be completed in weeks and months, not years. Schools would be healthier, providing environments that would support and stimulate the brain’s ability to retain and process knowledge. Crissy Field Center (San Francisco), the Watkinson School (Hartford, Conn), and Jacoby Creek (Arcadia, CA) exemplified this vision though the first generation of post VC funding solutions.
The company was growing, as were the issues. The investors determined that a professionally trained business team could best manage growth and expand funding, so a new CEO was brought in. I began a transition out of operating Project FROG and returned to the leadership team at MKThink.
Strengths of Architects for Innovation
That I am contributing this article, having come full circle from being a consulting architect and dabbling inventor as CEO of MKThink, to serving at the helm of Project FROG, and back again, reflects both the architect’s limitations and potential for driving the entrepreneurial experience. First, the potential: consider this outline of key factors of successful innovation, which are shared with architectural training and practice:
- Industry ripe for innovation: It starts with our industry, which remains unnecessarily rooted in traditional methodologies. Also, the issues of our era—global connectivity, sustainably economic practices and environmental management— are non-traditional problems that benefit from prescient application of technology combined with social commitment. Other industries have made these connections for huge societal advancement. Broad and deep opportunities exist for industry advancement by applying these lessons to our methods: problem-definition, design process, systems integration, and ultimately architectural product development.
- The ability to innovate: Solving problems thoughtfully, effectively, and efficiently through creative means is the basis for architecture and also the basis for innovation. Architects commonly focus these skills on a one-off solution that addresses an individual project and then start again for the next assignment. This same sense of investigation, systematically applied to repeating problems, could transform the building industry.
- Integration of knowledge: Successful architectural practice requires skills in integration of broad fields of knowledge into a coherent and useful result. Applying these skills and knowledge creatively for each commission requires innovation on a daily basis. Taking the step to apply these traits to solve problems that are repetitive, rather than individual, is the main shift that distinguishes a good inventor from a good architect.
- Problem-solving-through-collaboration skills: Successful contemporary businesses thrive on the collaboration of individuals with solid team-building skills. Leading business schools establish very expensive curricula, and recruiters treasure-hunt for talent with these attributes. Innovation requires a team of dedicated, forward thinking, creative people to work together to achieve a superior outcome.
This is how architects already practice. The successful integration of designers, engineers, and policymakers into a financially responsible result is at the heart of what we do.
- Small business skills: Successful innovation is an essential primary ingredient for small business enterprise. Tight budgets, managing vision and risk, an ability to be creative and effective on financial fumes, and motivating teammates with non- financial incentives typify successful innovative ventures. Successfully managing a similar recipe also defines the majority of architectural practices.
Limitations of Architects for Innovation
On the other hand, rather than an automatic gateway to new ventures, our training and wiring as architects give us tendencies—and deficiencies—that must be managed to ensure innovative and entrepreneurial success. Many of the major impediments derive from the business facets of such ventures:
- Limited experience with investment business practices: Taking the ideas of others and transforming them into commercial success is a profession unto itself. Seldom can innovators, especially new innovators, manage the development of technologies into viable new businesses. There are requirements for capital, intellectual property issues, and legal and corporate procedures different from a service enterprise. The venture capital industry offers high profile and potentially appropriate means to propel innovation to commercial success. Yet, experience and caution are critical, as this road has a unique set of procedures, tendencies, and patterns, refined to serve the investment partners first and foremost. The VC portfolio approach will sacrifice an individual company for the hard realities of the portfolio as a whole.
- Credibility and partnership with financial backers: Our professional world is not one that has established supporters in the financial communities. The recent history of innovation and entrepreneurial success has been in technology fields, particularly those that are low on capital intensity and high on consumer appeal. The long cycles of building and the lack of consistent investment precedent lack the appeal of software technology or social networks. Also, the independent lateral thinking and confident nature that comes from the experience of an architect (which suit creativity and innovation so well) may be at odds with the control and consistency favored by the equally strong willed investment community. They are fond of claiming that for each successful business venture there are a hundred great ideas, and that the difference between a hit and a failure is in business proficiency. These conflicts commonly characterize involvement with the venture capital process, and may be why so few company founders remain through the growth stages of the companies they found.
- Financial success becomes the metric for professional success: There is some validity to the contradictions noted in the last point. Architects tend towards broad definitions of success. Investors have one metric of success: financial return. Having worked with investors who present themselves as socially minded, environmentally minded, or otherwise motivated by ideals, I have found that professional investors do not confuse investment with philanthropy. The presentation of “socially-inspired” investors in practice is more a means to organize investments and knowledge around industries of interest. Perhaps some socially minded investors will accept some degree of the “social return” measured in a few percentage point of flexibility, but the similarities to traditional methods are closer than the differences. Architects do not often calculate this way. If we did, we would be in another field entirely. Thus, success in this area requires an artful balance of your priorities with an open-eyed recognition of your investor’s goals.
- Entrepreneurship takes focus and commitment: The investment community is correct to value not just the innovation, but also the roles that bring those ideas to market. Thus, innovative pursuits by an architect would be difficult if positioned as either the diversification of an architectural practice or a sideline activity. Success through the various obstacles requires total commitment to the end goal while maintaining a willingness to cooperate with very different types of professionals who expect that commitment.
It makes tremendous sense for practicing and trained architects to consider innovation as a structured professional pursuit. There is a need, there is a market, and there is precedent for success. Architects have valuable training and skills. There is an investment and partnership structure available to support certain ideas. If the creative professional has the will and ability to participate with the financial community, there is a reasonable opportunity for success.
As another point of reference: my first initiative upon my full-time return to the leadership of MKThink has been to create a dedicated Innovation Studio, focused on developing next generation building system ideas and technologies into new commercially viable enterprises.