In a city where manufacturing is our greatest industry, it’s easy to forget the impact of generating our own jobs and wealth. Step inside Rockford’s EIGERlab, where home-grown entrepreneurialism is the basis for a new economic paradigm
Some manufacturers create and assemble things. Others process foods or chemicals.
But EIGERlab, 605 Fulton Ave. in Rockford, is making something completely different. In a city where 20 percent of all jobs involve manufacturing, EIGERlab has spent the past decade helping to build companies of the future – companies capable of bringing jobs and wealth to the community.
At its core, it’s a nonprofit business incubator and accelerator, an organization that helps new companies to start and helps existing companies to grow. Inside this former engineering office on the Ingersoll campus is a battery of resources to help entrepreneurs realize their dreams. As its sciency name implies, it’s a laboratory where business ideas come alive.
Locally, EIGERlab is a center of innovation, one that has propelled homegrown businesses as far as the Consumer Electronics Show (CES), and as nearby as the factory floors at our region’s manufacturing powerhouses.
Nationally, it’s actually one of about 1,200 U.S. incubators supporting innovation. In 2011, North American incubators helped about 49,000 startups that supported nearly 200,000 workers, according to the National Business Incubators Association (NBIA), a trade group to which EIGERlab belongs.
In other communities, as in Rockford, incubators are doing incredible things. Chicago’s 1871 incubator and coworking space puts digitally focused entrepreneurs, investors and mentors in the same room.
In Silicon Valley, YCombinator selects a handful of startups for an intensive three-month bootcamp that often results in investor funding. It’s graduated Internet juggernauts such as Dropbox, Reddit and Airbnb.
EIGERlab serves many industries, but it has an inherent knack for high-tech manufacturing and engineering. Hidden away in an old industrial complex owned by Ingersoll, EIGERlab’s accomplishments are often overshadowed by local economic news, yet this just may be Rockford’s best shot at igniting a new paradigm.
“What’s the last big manufacturing company that we attracted to Rockford?” asks Dan Cataldi, EIGERlab’s executive director. “We don’t attract a lot of big companies to Rockford. It’s competitive, and we’re like anybody else. But Woodward Inc., that’s business retention and an expansion of an existing company. We have to keep and grow our own.”
Inside the Lab
Consider EIGERlab as a sort of one-stop shop for business resources, where nearly 250 local businesses received help in 2013.
Along with incubating and accelerating businesses for a fee, EIGERlab is also home to a product development center, covering everything from licensing and patenting to rapid prototyping on a 3-D printer. There’s even a workforce development center that trains unemployed or underemployed workers on entry-level machining skills.
Within the building, independent groups offer additional services, the sorts of relationships that factor into everything else, at little to no cost. There’s the Small Business Development Center (SBDC), a state agency that offers business planning consultation and training, and SCORE, a nonprofit that pairs up retired executives with small businesses in need of a mentor. EIGERlab even has resources for obtaining government contracts and exporting products to foreign countries.
“We have 40 manufacturers that sit on an advisory council and inform us as to what they need,” says Cataldi. “EIGERlab is about identifying what small to mid-size, growth-potential companies need, and how we can connect our services with a need in the community, to get them to grow quicker.”
Companies housed in the lab are provided with furniture, Internet and meeting spaces, on a one-year lease that allows for occupying more or less space, as business needs evolve. About half of businesses that pass through EIGERlab are manufacturers, so there’s also access to an adjacent 20,000-square-foot shop.
Before setting up in the incubator, a company first must endure a business planning process that analyzes 20 factors, from business concept to operations and customer relations. While housed here, the company must pursue its growth strategy.
“The objective isn’t just to rent cubes,” says Cataldi. “It’s to rent cubes with the idea that you’ll grow to two cubes, then three cubes, then four cubes, and then we move you to some other part of the building, where there’s more dedicated space. Phase three would be to go forth and continue to grow a company outside the EIGERlab.”
The signs of business expansion are all around. Upstairs, there’s a Chicago-based IT company that specializes in e-commerce infrastructure. Since re-shoring its operations from Kiev, Ukraine, the company’s Rockford operation has exploded, expanding from three cubes in 2011 to 26 cubes today. Next door, an engineering company has expanded over five years into nearly 1,800 square feet of office space, plus an additional 5,200 square feet of shop space. Nearby, there’s a company working behind closed doors, handling traffic photos for potential I-PASS tollway violators.
“Sometimes, the computer can’t sort it out, so these people have to,” explains Mike Cobert, EIGERlab’s assistant director. “Every time you go through the tollway and you don’t pay, there are up to eight photos taken of you.”
The CNC shop downstairs provides a training ground for unemployed or underemployed workers earning certifications for manufacturing jobs. They’ll learn about the basics of acquiring and holding a job – showing up on time, dressing properly – and learn about advanced manufacturing, before testing their skills using computer-controlled manufacturing machines. Graduates are often hired by local manufacturers.
Nearby are several 3-D printers, which enable rapid prototyping of various products: a beer tap handle designed for Madison, Wis.-based MobCraft Beer; prototype hand tools made for Snap-On; hair dryer attachments. Not every client in need of a prototype comes from Rockford.
“You may be be shocked at how many people are coming in from Chicago,” says Cobert. “We’re currently helping one entrepreneur, drawing the part and prototyping it. He says, ‘Mike, I can’t tell you how thankful I was the day that I found EIGERlab, because for years, I’ve had this idea, wanted to do something with it, but couldn’t.’”
In the adjacent manufacturing shop, EIGERlab companies are producing things, and in some cases performing “skunkworks” research and development. In one corner, a local manufacturer is refining a new production system for a new type of equipment. Here, engineers can test their application away from the office grind. Just a few feet away, a new business owner is sharpening saws for industrial clients. Thanks to an arrangement with Ingersoll, which owns the building and leases space to EIGERlab, these clients aren’t responsible for electrical costs.
“For a startup company, that’s huge – ‘I know my monthly cost is this,’” explains Cobert. “That’s important, because they don’t have to worry about spikes in energy costs.”
Like many innovative ideas, EIGERlab was born in the aftermath of chaos. Following Rockford’s manufacturing exodus, local leaders began to ask: What’s the next big thing for Rockford? They quickly narrowed in on high-tech advanced manufacturing.
EIGERlab officially opened in September 2004, as part of the nonprofit Rockford Area Ventures, an entity supported by tax dollars secured through then-Congressman Don Manzullo.
At first, it was a mixed-use incubator focused on nanotechnology and micromachining, but leaders soon realized the Rockford region lacked competitive resources. Enter EIGERlab’s first major evolution.
“Once we changed our focus, we started looking at what we can do next to help Rockford businesses grow,” says Cobert, a former Ingersoll employee who’s been here since the beginning. “And that’s when we started in with the rapid prototyping.”
The shift enabled EIGERlab to expand its services and obtain federal grants to assist other small businesses, across a variety of industries and locations. The prototyping, or 3-D printing, became an additional revenue source for outside clients, in addition to helping inside clients. It also opened the door for additional grant funding.
“The original objective was to do this for Winnebago and Boone counties,” says Cataldi. “But then we received a grant – a big grant – for six counties that included Rock, Walworth, Racine and Kenosha [in Wisconsin]. So, suddenly we did this on a regional basis, and we offered rapid prototyping and 3-D printing services to those other counties. Now, we’re talking to those other counties about our workforce training services.”
EIGERlab evolved again around 2008, when its assets were sold to a sister entity of the Rockford Area Economic Development Council (RAEDC).
“We took on the same mission as the RAEDC – grow wealth and jobs within the community,” says Cataldi. “So, we had to take a look at every program that we had, and some programs we didn’t have, and say, ‘What’s it look like for us to be able to accomplish the vision?’”
When Cataldi was named executive director in 2010 EIGERlab partnered with Rock Valley College, to streamline business support services, many of which are now located under one roof.
Today, EIGERlab remains a mixed-use incubator, serving a wide variety of industries. Its on-site SBDC helped to launch 19 new businesses last year, and welcomed 156 new clients. In 2012, the SBDC helped to launch 10 new businesses and expand four, creating an estimated 70 jobs and retaining 115.
“We have both a large Rolodex and network,” says Cataldi. “You can come here to grow your business, and it doesn’t matter if you’re a startup or an existing small business.”
Recruiting Growing Companies
Mark Tingley first realized opportunity as a design engineer.
“The design teams I managed were responsible for complex pieces,” he says. “I had to look for engineering help, but it was hard to find companies capable of what we needed. Going through that process, I realized there was a gap.”
Seeing a need for high-precision turnkey engineering, design/build services and project management, Tingley founded Accelerated Machine Design & Engineering, and turned to EIGERlab to get it off the ground.
While working within EIGERlab, Tingley has seized many opportunities, including the mentor connections through the SBDC. Its coworking spaces have also been an ideal place to discover future customers. “We have been introduced to a few opportunities we wouldn’t have been invited to, if we weren’t in EIGERlab,” he says. “We do rapid prototyping, and some companies have an idea, but need the engineering to go along with it. We can help them.”
Six years in, Tingley and his team of 12 are ready to spread their wings. Since launching in 2008, the company has steadily grown from one cubicle to nearly 7,000 square feet.
Tingley’s not the only success story here. In fact, EIGERlab has several ways that it’s discovered and grown inventive enterprises. Through its annual FastPitch competition, area entrepreneurs are encouraged to pitch their business concept in front of possible investors.
“Anybody who has an elevator pitch can come and share it,” says Cataldi. “It’s been pretty successful in the seven years that we’ve run it. It’s been great for finding good ideas – in some cases, really good ideas – that can be grown.”
Paul Niedermann’s great idea won him third place in the Rock/Whitewater County FastPitch in 2012; six months later, he met a local investor during another FastPitch.
Niedermann’s revolutionary thin-speaker technology was recently on display at the CES, and that exposure has garnered notice from worldwide electronics producers including Apple and Samsung.
His company, Prescient Audio, now operates apart from EIGERlab, in a Rockford-area facility where he and four employees produce super-thin speakers for use in homes, cars, smartphones and even musical equipment. Half of their new space is dedicated to continuing research and development.
“It’s great to be able to come into a place like this, instead of trying to work it out entirely on your own,” he said at a recent product unveiling. “This process may have never even reached this point without startup help, bringing things together, getting a bunch of minds working for you, in a forward direction.”
And then there’s Adrian Vazquez, hair stylist and owner of Totally You Hair Salon in Rockford, who took second place in the 2013 FastPitch. Thanks to some help from EIGERlab’s prototyping and advising services, Vazquez’s NZ3 hair dryer attachment nozzle is now available nationwide.
EIGERlab continues to seek the next innovation, constantly building new connections with business owners. It currently maintains at least three monthly business roundtables for local business owners.
“We ask, what does hiring look like, and what problems are you facing?” says Cataldi. “What problems or barriers exist in our marketplace? We get feedback on what’s going on, and from that, we can identify specific companies that have specific problems. We then take that to the side and talk about how we can help them.”
Challenges and Opportunities
In order to help companies to grow and prosper, the nonprofit, self-supporting EIGERlab needs money, something that’s always hard to come by. The majority of its revenue comes from rental space, client fees and various grants.
“Neither Rock Valley College nor RAEDC fund us, so it’s a combination of business unit revenues and grants,” says Cataldi. “Grants go away, so we have to figure out how to increase business revenues or decrease expenses – or find new grants.”
But even that is growing more difficult, especially as some long-term grants expire. Nationally, few incubators are truly self-sufficient. About 30 percent of American incubators are sponsored by academic institutions, while about a quarter are supported by economic development agencies, according to NBIA. Another 16 percent are sponsored by government entities.
But EIGERlab largely supports itself. Its only consistent support is the building itself, which Ingersoll leases based on occupied space.
“In the perfect world, it would be nice if someone donated a building to us,” says Cataldi. “We don’t have that situation. It would be nice if philanthropists in the community could funnel dollars to us, but we don’t currently have that situation.”
But even more dangerous is a lack of community recognition, something Cobert and Cataldi would like to change.
“We’ve been here for almost nine years now, and you’ll still hear: ‘Gee, I’ve never heard of EIGERlab,’” says Cobert.
In part, they suspect it’s because of EIGERlab’s evolving focus and services, and partly because of its wide array of capabilities. But maybe it’s also because entrepreneurship is a small, seldom-celebrated niche.
“For the typical person, they’re not looking to start their own business or grow their own business,” says Cobert. “Most people are worried about getting a job, and businesses like the ones we talk to are focused on what they’re doing today. They don’t stop to think about growing their business.”
Cataldi believes there’s also a lack of overall awareness. In particular, he cites a study performed in 2012 by Angelos Angelou, an economic consultant who indicated several areas – downtown growth and education in particular – where EIGERlab is well-positioned for prosperity, but underutilized.
“One way to grow Rockford is by finding and identifying existing companies, or attracting disruptive technologies,” says Cataldi. “We could bring an aerospace company to Rockford that has five employees, but it could have 50 if they had some help. So, we need Rockford to understand that EIGERlab is a place that can make this happen, if there’s a desire, and a long-term commitment.”
Looking forward, Cataldi sees several opportunities for EIGERlab to influence the next generation of Rockford business owners. For one thing, locally owned companies are the most likely to stay in town, and our region has plenty of locally owned operations.
“There are probably 700 companies, most of which are in manufacturing and have 50 employees or less,” he says. “Many of those have 30 employees or less – that’s a great opportunity to identify some that can grow into 100, maybe 200 or more employees, but the business owner doesn’t have the time, the resources, or the funding.”
Even more importantly, there’s an impending “brain drain” of talent, as baby boomers retire and sell their companies to the next generation.
“A lot of those companies are owned by 55-year-olds and older, and they’ve been so busy working in their businesses that they haven’t had time to work on their businesses,” says Cataldi. “So, what happens when they suddenly reach retirement age? What happens to the jobs, the 20 or 30 employees? The logical assumption is they’ll sell the company, but if they haven’t worked on their plan, the company probably doesn’t have the value they expected it to have.”
Rather than selling those businesses to outsiders or altogether folding, owners could instead find help through EIGERlab, says Cobert. After all, the incubator’s services include advice with succession/transition for current owners, and startup and growth planning for successors.
“There are too many companies that are sold to somebody else outside the area,” says Cobert. “You’ve seen it many times – they’ll keep the company open and slowly move pieces out of town, and next you have an empty building. You look all over Rockford and you see that.”
At the same time it’s preserving our local operations, EIGERlab also is providing an alternative to costly business attraction.
Rather than wait for a magic bullet, Cataldi and others around the organization believe it’s time for Rockford to take its own action, to cultivate its own jobs and ignite an entrepreneurial mindset all around.
A growing company attracts supporting businesses and delivers new employees, not to mention a little extra wealth.
“Really, the key term for EIGERlab is profit,” says Cataldi. “We want to help companies to generate more profit. And we let all that other stuff – wealth, job creation – be the result of us helping our own companies to be more profitable.”
NWQ EXTRA: Prescient Audio Leads a Tech Revolution
Sometimes, all it takes is one great idea to start a new business. That’s how Paul Niedermann stumbled upon his revolutionary thin speaker.
“I visualized the way a driver should be built, and I could see its parts spread out in 3-D,” he says. “I had that idea in 2000, and tucked it away, until I encountered a situation where I needed a thin driver to go into my car and it didn’t exist. So I decided to actually develop it, and I built the first prototype pretty much on my own.”
At the time, Niedermann was working for another EIGERlab resident, B/E Aerospace, where he had developed a novel concept for some aerospace equipment. Relying on his background in industrial and product design, Niedermann laid out his initial concept, then refined it three more times.
The result was his TD-12 speaker, a loudspeaker that’s just 2.5 inches thick – about a fifth the size of a traditional driver.
“Typically, that driver would be 10 inches deep and weigh 40 to 50 pounds,” he says. “We’ve reduced that by taking all that hardware and moving it to the perimeter of the frame, giving it the world’s largest voice coil.”
Once he set up in EIGERlab around 2011, the real work began. Niedermann had to worry not only about creating and patenting his product, but organizing his operation and selling units.
“I didn’t even know that much about running my own business,” he says. “And they helped me through many, many meetings and conversations, covering every aspect of the business. They introduced me to a lot of unique techniques and processes, as far as building things in the business plan, and what it would take in the future to make this company start. And then, where do we go from there? How do we get our technology produced, how do we look at different markets?”
Through FastPitch competitions in 2012 and 2013, Niedermann began attracting the help of local investors. In April 2013, his company, Prescient Audio, was formally born.
The thin, scalable technology now allows Niederman to sell speakers in a variety of sizes and formats, from large 12-inch subwoofers to bottle cap-sized smartphone speakers. Its uses are wide-ranging, from home entertainment systems to car audio and musical amps.
Among systems he’s developing:
A subwoofer that stores under the couch or mounts within a wall, between the joists.
A dual-sided guitar amp that’s thinner and lighter than traditional units, and actually cancels out competing noise.
A smartphone case with an embedded speaker that reduces noise distortion.
Most of his products are available at PrescientAudio.com, though the smartphone case will soon be available on Kickstarter. Thanks to his display at the Consumer Electronics Show, Niedermann says he’s also received attention from electronics makers including Apple and Samsung.
Prescient currently has just four employees, but a network of about 30 regular consultants. Niedermann and his partners recently purchased a local manufacturing center at 4904 Colt Road, Rockford, and he says he intends to add more employees over the next few years, and to keep production as close to home as possible.
“This is my hometown, and this is where our headquarters is located,” he says. “This is where we’re building our technology and shipping from here.”