Pittsburgh’s tech accelerator aims to solve the city’s startup challenge – GeekWire
PITTSBURGH — Inside this city’s startup launchpad, Adhithi Aji shows off a smart flexible label that captures consumer product usage data from shampoo bottles and dog food bins. Seated on a chair upstairs, Seth Glickman dons a HoloLens while using augmented reality piano learning technology. And just down the hall, Jessica Strong explains how being a mother of three young kids inspired her to launch a pop-up childcare service.
Welcome to AlphaLab.
Spread across two floors in Pittsburgh’s East Liberty neighborhood is one of the country’s first-ever accelerators. Since launching in 2008, AlphaLab has graduated 147 early-stage companies in a variety of industries, helping them turn ideas into legitimate businesses while becoming a bedrock of the growing Pittsburgh tech ecosystem.
Graduates of the 20-week program include Powered Analytics (acquired by Target); BlackLocus (acquired by Home Depot); Shoefitr (acquired by Amazon); NoWait (acquired by Yelp); and other startups that continued to grow in Pittsburgh like JazzHR, Gridwise, and The Zebra.
It’s a critical component of the tech scene here, but it’s still not enough. Despite the best efforts of AlphaLab and others, Pittsburgh continues to suffer from a lack of a global tech powerhouse — a giant, internationally-known company headquartered in the city that could serve as a magnet and anchor for the broader tech community, drawing the talent and creating the wealth to fuel the broader ecosystem.
This persistent challenge is a recurring theme in the tech community, with entrepreneurs and investors regularly debating whether it’s due to a lack of investment capital or simply not enough great startup ideas. Jim Jen, AlphaLab’s executive director, was candid in an interview this week about the need to take Pittsburgh’s tech community to the next level.
“I think now people actually do believe that you could do it in Pittsburgh, and there’s potential,” he said. At the same time, he said, there’s pressure to deliver on that potential as a region, and make sure that Pittsburgh doesn’t “get complacent or think somehow that this is victory.”
“This is now the next phase, and it’s going to get harder,” he said. “Some of that might be tougher conversations around what’s needed, and more critical feedback to the startups because now we’ve moved beyond the phase of just saying, ‘Hey, you know, you should start a company.’ Now, it’s like, ‘Alright, here’s what you need to do to your company if you want to be world class.’”
The seeds of this ambition are visible inside AlphaLab. It’s unique among accelerators, not only for its early formation and longevity but also because it was born out of Innovation Works, a Pittsburgh-based organization that is the largest seed stage investor in southwestern Pennsylvania. Innovation Works is funded in part by the state via the Ben Franklin Technology Partners program, an initiative established more than 30 years ago in response to the collapse of the steel industry. It has invested more than $73 million across 335-plus startups.
Jen joined Innovation Works in 2002 after a tech career in Silicon Valley and became executive director of AlphaLab when it launched in 2008. From the outset, Jen said, AlphaLab’s mission was to focus on “three Cs” for Pittsburgh: companies, capabilities, community. The accelerator aimed to help create local startups and guide them to product-market fit; ensure that its companies and internal team had access to appropriate tools and resources; and connect entrepreneurs to the larger Pittsburgh tech community, with the help of Innovation Works and others.
“As we look back, I feel good about what we’ve accomplished on all those fronts,” said Jen, who previously worked at HP, Booz Allen & Hamilton, and Instill Corporation.
AlphaLab takes 5 percent common stock in exchange for a $25,000 investment from Innovation Works and office space. It only accepts six-to-eight startups per cohort, allowing more time and resources with each company.
Jen said AlphaLab borrowed concepts from early accelerator pioneers like Y Combinator and Techstars, but also added its own touch. For example, the 20-week duration is longer than most other programs, giving AlphaLab flexibility with startups that may need more time to build the right product, or that may not fit the mold of a typical early-stage tech company. It also can draw funding from Innovation Works or Riverfront Ventures — a for-profit venture fund and affiliate company of Innovation Works — for follow-on investment rounds after the program concludes.
“We can be patient,” Jen said.
AlphaLab also launched a hardware-focused accelerator, AlphaLab Gear, in 2013. Cheaper prototyping methods and direct-to-consumer business models made it possible to create a hardware startup in a capital-efficient way, said Ilana Diamond, founding managing director of AlphaLab Gear.
That, plus Pittsburgh’s history of manufacturing, convinced AlphaLab to launch the hardware accelerator. It offers a 21-week customer discovery program and a separate 15-week manufacturing module.
“When you think about what competitive advantages we had in this region — we know how to make things,” Diamond said.
AlphaLab has played a key role in Pittsburgh’s startup scene, which was largely non-existent a decade ago. Jen said investors from across the country who want to learn more about Pittsburgh-based tech companies will often contact AlphaLab, which acts as a conduit. That’s particularly important in a place like Pittsburgh, which does not have the level of investment capital available in places like the Bay Area or Boston.
“If we know what investors are looking for, we’ll show them a list of companies they may want to look at,” Jen said. “We’re building out an investor network to help companies here.”
There are traces of AlphaLab all over Pittsburgh, beyond the confines of its office. Attend a local tech event and you’re bound to run into someone with ties to the accelerator, either as alumni or a new company in the latest cohort. The phenomenon is partly due to the big city, small town nature of Pittsburgh. But it also speaks to AlphaLab’s impact within the tech community.
“It’s like the home base,” said Avi Geller, CEO of Maven Machines, an AlphaLab grad. “That’s what brought a lot of us to the city.”
Dick Zhang, CEO of drone startup Identified Technologies, dropped out of the University of Pennsylvania and moved to Pittsburgh after he was accepted into AlphaLab Gear’s inaugural class. His company went on to raise a $3 million and now employs 25 people in the Steel City.
“I definitely would not have started the company in an official capacity without AlphaLab. I wouldn’t have known where to go,” he said. “There’s also something very encouraging about ten other founders with you, all struggling at 2 a.m., all preparing for the next pitch together, going through that pain together.”
AlphaLab is also committed to diversity within its programs and with the larger Pittsburgh community. Its building sits in the heart of East Liberty, a revitalized neighborhood that has undergone huge change largely driven by Google’s arrival in 2010.
Jennifer Van Dam, digital and community engagement manager for Innovation Works, said that AlphaLab opens its space to groups like the Association of Latino Professionals For America or Black Tech Nation. It also holds open office hours for anyone in the community, and created Startable Pittsburgh, a free eight-week summer program that teaches high school students about entrepreneurship and maker skills.
“It’s been a great way to get students involved in our ecosystem who otherwise might not have found a way to access it, or even know about it,” said Cole Wolfson, program manager at AlphaLab Gear.
Diversity is top of mind for Innovation Works — more than half of the companies it invested in over the past five years have co-founders who are women and/or people of color.
Global tech hubs require a robust startup accelerator. AlphaLab is ranked among the top U.S. programs, helping Pittsburgh transform from an iconic steel town into a modern innovation factory. AlphaLab companies are expected to remain in the region following their graduation.
Jen said the city doesn’t have the density you find in Silicon Valley or Seattle, but there is big potential. He compared Pittsburgh’s tech ecosystem to a hot startup.
“We’re like a startup that has great engagement in our app or with our product, but we just don’t have the size yet in terms of number of users,” Jen explained. “But it’s a company that should get funded, and if you funded it, this thing could explode. That’s how we see Pittsburgh.”
As part of our ongoing GeekWire HQ2 coverage this month, I spent a day at AlphaLab and AlphaLab Gear meeting with entrepreneurs, learning about why they joined AlphaLab and what it’s like building a company in Pittsburgh.
Adhithi Aji, CEO of Adrich; Nesra Yannier, CEO of NoRILLA
Aji and Yannier both graduated from nearby Carnegie Mellon University and were part of the most recent batch of AlphaLab Gear companies. Aji is the founder and CEO of Adrich Tech, which develops smart product labels that help brands and retailers track consumer usage of items like shampoo or wine.
“Today there is a lot of data up until the retail store, but the last mile is really broken,” Aji explained. “There is no visibility to how, when, and where the product is being used. We are helping brands close that feedback loop from consumers directly.”
Aji pointed to low operational costs and access to local talent from universities like CMU and Pitt as advantages to starting a company in Pittsburgh.
Yannier is the CEO and founder for NoRILLA, which brings together the physical and virtual worlds to help improve STEM learning with mixed reality technology.
“It checks what users do in a physical environment with a computer vision system and gives them personalized feedback as they make experiments and discoveries in the real world,” she explained.
Yannier, who received her Ph.D in human computer interaction at CMU and a masters degree from Stanford, said she could have started the company in New York City but decided to stay in Pittsburgh.
“The community is closely tied together, and very friendly and helpful,” she said. “And especially in our case with education tech, there is a great network and customers to talk to. Everyone is trying to help each other rather than compete against each other.”
Eric Sinagra, CEO of PathVu
PathVu is creating a “Google Maps for sidewalks,” with a goal of mapping out sidewalk infrastructure and providing more detailed information about sidewalk accessibility. The company’s mission is personal for co-founder Eric Sinagra — his co-founder, Jon Duvall, uses a wheelchair, as does his brother.
“Helping people with disabilities is a core passion of our company,” he said.
Sinagra, a Pittsburgh native who graduated from the University of Pittsburgh, said the city is perfect for testing the company’s technology given its unorthodox terrain and geography. “If we can navigate the hills and sidewalks of Pittsburgh, we can do it anywhere,” he said. That’s also a reason why companies like Uber have big self-driving research operations in the city.
Funding provided by AlphaLab Gear was a big draw to the accelerator, but Sinagra said there is additional value.
“It’s the connections with mentors, investors, and resources,” he noted. “We thought AlphaLab Gear would be a good start for us as an early-stage company.”
Jessica Strong, CEO and co-founder of Flexable
As the mother of three young children and co-founder of a co-working space in the Pittsburgh area, Jessica Strong knew all about the struggles of finding someone to watch her kids. In 2016 she teamed up with fellow mother and entrepreneur Priya Amin to create a Hotel Tonight-like on-demand model for childcare.
They found some traction with the idea but after joining AlphaLab, the business model crystallized.
“We pivoted and put childcare at events like networking nights and conferences,” Strong said. “That took off and we had paying customers.”
Flexable is also now seeing demand from workplaces that need more on-site childcare resources.
Strong called Pittsburgh a “super-well connected city.” Her husband, for example, catered lunch at AlphaLab last week.
“I feel like there’s an ecosystem of people trying things that is just well-received here,” Strong added.
George Cook and Christian Bilger of Honeycomb Credit
After coming up with a startup idea at Dartmouth, George Cook and Ken Martin thought about moving to San Francisco or New York. But given the company’s mission — “we are the community bank for the 21st century,” Cook said — the founders knew they needed to be elsewhere.
“We were building a Main Street, middle-America solution and we didn’t want to do that from the coasts,” Cook said. “We landed in Pittsburgh, and we’ve been thrilled with it.”
Honeycomb Credit lets small businesses borrow money from their own customers in a community; the company calls it “debt crowdfunding.”
Cook said the blue collar roots in Pittsburgh help the company grow.
“People really, really care about Pittsburgh and they have that pride in place,” he said. “That’s important for our business model to work.”
Cook added that going through AlphaLab was like “bowling with bumpers.”
“They have so much knowledge of the startup ecosystem that helped prevent us from hitting some of those common pitfalls that early-stage companies have,” Cook explained. “It helped us get to the next level without having to go through some of those hardships.”
Sarabeth Boak, CEO and co-founder of Stitchbridge
Virtual reality startup Stitchbridge is another example of the connection between AlphaLab and CMU, and the growing number of out-of-town tech workers coming to Pittsburgh. The company’s three co-founders are all CMU grads and hail from across the globe: New York City, Seoul, and Taipei.
Stitchbridge helps video producers edit VR content. Joining AlphaLab was attractive given that startup is working in a nascent industry, said Stitchbridge CEO Sarabeth Boak.
“We wanted to stick with people we knew could offer a great support network,” she said.
Coming from New York City, Boak said there is definitely a different culture in Pittsburgh.
“There’s a friendliness here, a desire to go out of your way to help that is not necessarily readily available in places like New York City,” she said.
Seth Glickman, CEO and co-founder of Music Everywhere
Music Everywhere shares many qualities with Stitchbridge — it’s another startup created by CMU grads in the mixed reality space. The company is using Microsoft’s HoloLens device to overlay piano keys with virtual characters.
“We’re somewhere in the gap between education and fun,” said CEO Seth Glickman.
Music Everywhere built its prototype and people loved it, but the founders needed help on the business model.
“We started to ask questions we didn’t ask before,” Glickman said of joining AlphaLab.
The startup recently won a $100,000 cash prize from Unity and Microsoft, beating out 1,000 other ideas as part of a HoloLens contest.
Hallie Dumont; Drew Brisley; and Ankur Dobriyal of Module Housing
Given the number of people moving back to Pittsburgh and the vacant land across the region, this city was the perfect place to launch Module Housing.
The startup develops and builds homes that can easily expand based on changing circumstances, like a new child or a big promotion.
“The more we learned about Pittsburgh and the real estate market in Rust Belt cities, we learned that it was the right place to start,” said Chief Design Officer Hallie Dumont.
Drew Brisley, chief product officer, said that AlphaLab has helped the company focus on the customer and “put energy in the right places.” He also said being in AlphaLab around other entrepreneurs going through something similar, even if in different industries, is valuable.
Brendan Quay; Jacob Kring; and Daniel Mosse of HiberSense
The camaraderie with fellow entrepreneurs in AlphaLab is also important to Jacob Kring, co-founder and CEO of HiberSense.
“Being around the other companies, some of them have gone through similar things,” he said. “When I run into a problem, I can walk two feet over and ask, ‘how did this happen?’”
HiberSense started at the University of Pittsburgh and aims to control the temperature inside a home with sensors in every room that track a number of variables.
“We try to make you more comfortable,” Kring said.
Kring added that the company, which works with local hardware manufacturers, appreciates the rolodex that AlphaLab provides.
“The people who run this program are some of the most well-connected people in the city,” he said. “If you need to talk to somebody, they can make it happen.”