Conversations
Don Herriott, Director of Innovista
MidlandsBiz:
What is Innovista?
Don Herriott:
Innovista is an effort to transform the economy of Columbia, SC from one that has historically been dominated by government jobs, to one that is more vibrant and centered around knowledge-based businesses that offer high-paying jobs. It is a quest to birth, or attract, high-tech companies. Ideally these companies core business is hard to duplicate (possibly protected by a patent) and whose products or service are globally competitive.
Innovista is also a research park akin to ones that have been developed around the country, all of which have at their economic core, a world class research university: Research Triangle Park (Duke, UNC and NC State, North Carolina), Silicon Valley (Stanford). These parks benefit from the intellectual power of the University directly or indirectly as the source of new ideas and knowledge. The physical place for Innovista will attract companies that seek to benefit from locating in close proximity to our world-class research university, the University of South Carolina.
Innovista is an urban plan to transform the area bordered by the Congaree River and Assembly, Blossom and Gervais Streets into a cool place to Live, Learn, Earn and Play at the heart of the city. Growing dynamic companies want to locate in dynamic, vibrant areas. It comprises an Innovation District and a Waterfront river District. In the former, we envision a place where engineers, scientists, IT workers, and web designers etc. can live and work. In the latter, there will be a new 100 acre Riverfront Park along the Congaree River with an outdoor amphitheater, bicycle and pedestrian paths.
MidlandsBiz:
How do you pay for this physical part of Innovista?
Don Herriott:
While the water front park will be financed through a federal grant, this type of transformational infrastructure is only possible if you have businesses located inside Innovista paying taxes.
MidlandsBiz:
What are the assets that are in place to help grow local high-tech companies? How do you get those companies into Innovista so that they can start paying taxes and accelerate the building of the project?
Don Herriott:
It will take time and patience. The legislators did a good job five years ago putting in place a public policy plan to address the state's need to build a knowledge-based economy. The Endowed Chairs Program has attracted a steady stream of world class researchers to the state, and the Research University Infrastructure Act has provided the means to build world class labs. The Legislature also mandated that three innovation centers be built around the state, in Charleston, Greenville, and Columbia. The one near MUSC is already open; the one in Columbia is opening in August, and the one in the Upstate will open in early 2011.
First you need to have the ideas to start a company and then there must be an entire ecosystem for entrepreneurship. Part of this ecosystem is a continuum of space in which companies can flourish. Some ideas flow out of the research labs at the university. Technology can then be licensed to an entrepreneur who might initially locate his business at the USC-Columbia Technology Incubator, a self-sufficient organization that provides a low cost space for startups and access to additional resources such as business plan writing through the Small Business Development Center out of the Moore School of Business.
After about two years, a company will move out of the Incubator. We have two locations where companies can locate in reasonably priced space: the previously mentioned, new 70,000 square feet SCRA Innovation Center that is under construction on Assembly Street, and the Northeast campus of Midlands Technical College where we can house up to four companies. Companies at this stage in their history typically will be in prototyping or early market development. As companies approach the profitability stage, we hope they will put down permanent roots in Innovista or somewhere in the Midlands.
MidlandsBiz:
Many of these companies will not survive.
Don Herriott:
I used to work in Silicon Valley and unfortunately saw literally hundreds, if not thousands, of companies go through what is commonly called in the industry, the "Valley of Death". One common reason for failure is that companies run out of cash during a prolonged period where they are either pre-revenue, or not profitable. Early financing might come from "friends and fools". As you establish yourself, additional financing might come from angel investors or small business research innovation research grants that are available from the federal government. SC Launch! , a South Carolina based affiliate of SCRA, helps companies get started by matching those federal grants or providing up to $1M in loans or equity. SCRA has been a critical player in funding startup companies in this state. At some point, your company may need to access large amounts of capital from the venture capitalists (VC). Hopefully at that point, you are ready to make money. Each stage of development presents a huge funding hurdle for companies to overcome.
One of the gaps that we have in South Carolina is still an overall lack of funding. There are no VC companies in the state and even angel funding is inconsistent. The Upstate has a good network of angel investors called the Upstate Carolina Angel Network where as many as 100 angel investors fund companies. Angel investing is fairly well established in the Lowcountry, too, but it is weak in the Midlands.
Another common reason for failure is a lack of experienced management. You can be a brilliant inventor with a ton of good ideas, but if you don't have good business sense, you are not going to make it. You might be a great scientist, but if you have never run a business, the odds of making it through the Valley of Death are remote.
MidlandsBiz:
You were the CEO of a large global pharmaceutical company. Did you consider taking this route and becoming the CEO of a start-up company?
Don Herriott:
You have to be willing to work 100 weeks and pour your heart and your soul into any new venture. I felt that it was a better fit for me personally at this stage in my career to use my business experience in ways that can contribute to USC and the community.
I am on the advisory board of a cool startup company out of Florence called IH3.
MidlandsBiz:
The Innovista project has had a couple of bumps in the road. Did the project get off track?
Don Herriott:
We put our bets on a couple of private buildings in the Innovation District that did not pan out. The result was a well publicized parting of the ways with two developers of these buildings, who failed to deliver. Most would agree we should not have entered into an agreement with the last developer. Plans for the construction of the private buildings are on hold while we develop or revise our strategy for Innovista. If it was tough to get financing three years ago, it's worse now, so moving forward with these buildings is proving very challenging.
We focused perhaps too much on the physical part of Innovista and not on the jobs. Three high-tech companies, the Consortium for Enterprise Systems Management, TM Floyd and VC3, are moving into the Wilbur Smith building, bringing with them 150 knowledge-based economy workers. These three companies will not only anchor the Wilber Smith building, but also be a catalyst for other similar IT based companies to locate there. The fact that these companies have located outside of their originally planned space for Innovista is an artifact of the real estate market, not an indictment of Innovista itself but rather an affirmation of it.
MidlandsBiz:
Outline what buildings have been built in the Innovation District.
Don Herriott:
Our original plan called for five buildings: the state-funded Arnold School of Public Health, Discovery 1, and Horizon 1; and the privately funded ones, Horizon 2 and Discovery 2. The Arnold School is filled; the other two, Discovery 1 and Horizon 1 are 50% occupied. Additionally our School of Music is located in the Innovation District.
We tend to think of Innovista as five buildings; we should think much bigger and bolder. Silicon Valley, Austin, RTP has hundreds of buildings.
We need to rethink our strategy for the facilities. We need some speculative space to show prospects, but 100% speculative does not work. We will have plans for new buildings, but there will be a different model of financing and they will be more competitively priced. You can't procure financing to build a 100,000 square foot building without anchor tenants. People might pay a slight premium to locate in Innovista, but they are not going to pay double the rates.
MidlandsBiz:
We have heard a lot about our strength in fuel cells over the past couple of years. Talk about the role fuel cells might play in Innovista going forward.
Don Herriott:
In fuel cells, we now have two COEE (endowed chairs) scientists, one an expert in membranes, another in solid oxide fuel cells who are producing world class research here in the Midlands. We are very strong in this area, with many other top notch researchers doing cutting edge research. As with any of the research that comes out of the university, the critical question is: What is it about our research that makes it desirable for a company to want to locate here? Research has to have a value proposition to business; it can't exist in a vacuum. The essence of Innovista is in the innovation, and that innovation could come in fuel cells, perhaps nuclear energy, (an area that is going to be huge opportunity in the Southeast over several decades), perhaps something else.
MidlandsBiz:
Has the mission of Innovista changed?
Don Herriott:
The focus is different, but the mission is the same. At the moment, Innovista is less of a real estate proposition and more about creating an environment, infrastructure and ecosystem that is conducive to growing cool companies with USC acting as a fountainhead of innovation. We are putting more emphasis on trying to get the intellectual and the physical assets of the university clearly defined so that we can connect them to businesses.
MidlandsBiz:
Who are the people or constituents that you deal with on a day to day basis as head of Innovista?
Don Herriott:
Our business affiliations can be broken down into several categories: economic development organizations (the Department of Commerce, the State Chamber of Commerce, the Central SC Alliance, Columbia Chamber of Commerce, and the Columbia Development Corporation); affiliations in the university (the researchers and the foundations); the providers of physical locations both public and private for companies; and funding sources. Additional partners include EngenuitySC which is helping to create a culture of entrepreneurship and business groups like New Carolina, The Fuel Cell Collaborative to name a few.
MidlandsBiz:
How can you most productively spend your time to make Innovista successful?
Don Herriott:
I spend most of my time in meetings either with prospective clients, or strategic planning meetings, but I would like to spend more time with our faculty. The faculty is at the heart of Innovista and we have not engaged them properly to date. We need to put a structural plan in place to make it easier to connect business and industry to researchers so that success, commercial products and services that benefit the world, is more predictable.
MidlandsBiz:
Are there similarities between leading a business organization such as Roche and a public/private sector partnership such as Innovista?
Don Herriott:
Regardless of your situation, the essence of leadership is aligning multiple groups, lowering the internal resistance in your organization in order to increase the speed in which you are traveling towards your target. In business, it might be with different groups such as engineering, sales and marketing etc. With Innovista, it is 20-30 key people and organizations who are pulling the wagon and who want to turn Innovista into something successful.
MidlandsBiz:
How will Innovista be different from other research parks around the United States, around the globe for that matter?
Don Herriott:
The relocation of the Moore School of Business to the heart of Innovista will be a key differentiator. Companies that want to offer MBA's to their employees will have the top undergraduate international business school in the country right across the street. Our urban environment can create the Live, Learn, Earn and Play that will mean high quality of work and high quality of life can be found here like no where else.
MidlandsBiz:
What are your five and ten year goals for Innovista?
Don Herriott:
We would love to have a marquee company locate here, but for the moment we aren't swinging for the fence. We are looking to get lots of men on base, nurture and grow lots of companies organically that will develop deep roots in this community. It will be a long transition and we will have to stay the course. Research Triangle Park was not very dynamic in the first ten years of its life, but at some point, it started to take off and became a magnet for other companies. This is a more realistic expectation.
If we execute, there is no reason we can't in five years have a $100M company that was started and developed here. My ten to twenty year goal is to birth a Fortune 500 company!
