Merrimack Valley Startups Pushing Local Innovation, Global Lessons

Thirty miles north of Boston, and a million miles from Silicon Valley, they have a different way of doing innovation.

The city is Lawrence, MA. It’s an old mill town with the distinction of being one of the poorest cities in Massachusetts. It’s had the same problems that you’ll find in many towns around the country—crippling unemployment, poverty, crime, underperforming schools, and few career opportunities for young people. It represents one side of the wealth-disparity gap that seems to get bigger every year.

It’s certainly a change of pace from my typical reporting haunts of Boston and Cambridge. Driving across the Merrimack River into Lawrence, one is struck by the quiet beauty of the town, and its towering brick buildings that used to house some of the biggest textile mills in New England. The view is a constant reminder of the city’s industrial past—and, perhaps, what the next revolution might bring.

Last Thursday, I walked into one of those old mills and into the awards ceremony of a modern-day business-accelerator program. The program is part of a bigger revitalization effort known as the Merrimack Valley Sandbox, a nonprofit organization that is trying to boost local economic development and entrepreneurship through community outreach, educational initiatives, and startup programs.

The Merrimack Valley Sandbox was started in late 2010 with $5 million from the Deshpande Foundation. It’s the brainchild of entrepreneur and investor Desh Deshpande, who made his name at Boston-area tech companies including Cascade Communications and Sycamore Networks. The Sandbox has partnerships with area schools and colleges such as UMass Lowell and runs a co-working space in Lowell, MA, about 10 miles from Lawrence.

Deshpande has been taking lessons from his efforts to promote social entrepreneurship in rural India and applying them to his own backyard. He also helps promote tech innovation via the MIT Deshpande Center for Technological Innovation, but that’s a well-established entity designed to help innovations at the institute make it to market. The three-year-old Sandbox’s motto is “entrepreneurship for all.” It’s hard to argue with that, but the question is how to make it work—and how well it’s working so far.

As Deshpande is fond of saying, “innovation plus relevance equals impact.” What he means is that innovation—however you define it in terms of business or technology—is not enough to help society. One needs to solve real-world problems to make an impact, whether that means MIT scientists commercializing clean energy, say, or a community pulling together to boost the local economy.

What’s interesting about the Sandbox is that it’s a different breed of innovation from what you’ll find in a traditional tech cluster like Boston, Austin, or the Bay Area. It has very different goals. It’s about entrepreneurs motivated by local issues and solving local problems, such as creating jobs and new markets, supporting education and childcare, and developing resources for young people.

David Parker, executive director of Merrimack Valley Sandbox“It’s a different kind of economic development, which is from the ground up,” says David Parker (pictured), the executive director of the Merrimack Valley Sandbox, who was previously at TripAdvisor and other tech companies. “We’re letting entrepreneurs drive it. They run the show. The diversity of our entrepreneurs is our great strength.”

The idea is hardly unique. Yet how it plays out could hold important lessons for efforts in other regions. Deshpande estimates some 200 cities in the U.S. could be good candidates for the Sandbox model. Eventually he’d like to clone it and expand nationwide, with the goal of creating opportunities for the underprivileged. But first his team has to prove the approach works in Lawrence and Lowell.

A big piece of that proof—getting back to the event last week—is the Sandbox accelerator program. The sessions run twice a year for three months each, and this was the third class overall. On the bustling awards night, 14 startups were competing for $30,000 in prize money.

Startup accelerators, such as Y Combinator, Techstars, and MassChallenge, typically provide about three months of training to a select group of entrepreneurs. In these intensive sessions, founders refine their pitches and business models and work alongside peers and market experts to figure out what their business really is, find early customers, and start raising money from investors.

Danaris Mazara and a heavenly cakeI met several of the startup founders at the Sandbox event. Danaris Mazara is an 11-year resident of Lawrence who originally hails from the Dominican Republic by way of Puerto Rico. She started her local business, Sweet Grace Heavenly Cakes, after turning $35 in food stamps into baking ingredients to make sweets she could sell. Her handiwork was on prominent display at the gala (see cake photo).

Mazara’s business includes both a retail store she’s planning to open in Lawrence and a training program for aspiring bakers and cake decorators. “There are a lot of people without a job,” she says of the local community. “I want to teach others new job skills.”

Meanwhile, Jeremy Shannon is a young entrepreneur who’s getting a video-production-and-design company, FEMG Productions, off the ground. He’s a lifelong area resident, a product of the public schools, and a graduate of Emerson College in Boston (that’s where he first took an entrepreneurship class). He says he’s focused on “creating a new market for the area,” and also putting an internship program in place to teach students how to produce multimedia—including short snippets of video for brands in the era of Vine and Instagram.

And Mickey Cockrell, a native of Lowell, has started a nonprofit called Catie’s Closet, which goes into schools and provides clothing and other necessities for homeless kids. She says there are about 49,000 homeless children in Massachusetts. Her program is now in 18 schools around New England, including four in Lowell. (Catie’s Closet is one of the nonprofits participating in the TUGG fundraiser in Boston on March 13.)

Cockrell says the Sandbox accelerator taught her that she had to “have a great business, and be a great planner,” to make her social-innovation idea work. And while she was primarily inspired to make a difference in the local region, she says, “it’s bigger than the Merrimack Valley.”

That’s clear from all the Sandbox entrepreneurs, and the problems they’re trying to solve. There were technology ideas from the group, too—everything from a drone delivery system to presentation and data-visualization software to an online marketing play. But the main focus is on local economic growth, not hatching the next Instagram (though I’m guessing that would be a plus).

So how well is it working? Parker, the Sandbox head, points to some early metrics: In the past year and a half, he says, more than 600 people have shared business ideas through pitches and startup applications. About 120 mentors have been involved in the accelerator program. And 40 companies have emerged from there, with 70 percent of the first class still up and running. Parker says the biggest challenge now is figuring out the best way to support the entrepreneurs and help them succeed, both during and after the accelerator program.

The Sandbox seems to have struck a chord with the state and local government. Last month, the organization received a $150,000 grant from Massachusetts to boost its mentorship programs. Greg Bialecki, the state’s Secretary of Housing and Economic Development, spoke at last Thursday’s event about how entrepreneurship is driving job growth across Massachusetts, “not just in Boston or Cambridge,” and about how successful entrepreneurs are “not just Harvard and MIT students.”

Desh Deshpande (left) with Lawrence mayor Dan RiveraThe new mayor of Lawrence, Dan Rivera (pictured with Desh Deshpande), made the rounds with entrepreneurs as well, and spoke about the Sandbox’s role in revitalizing the region. “We are a lot further down the path than other cities,” he said to the crowd.

Which is a good start, but it sounds like a long path indeed. It’s still too early, for instance, to talk about the organization’s impact on jobs or education on a city-wide scale. Outside observers say that a few startup successes—and more time—will go a long way toward proving the Sandbox model. In any case, the overall mood at the gala was upbeat, energetic, and realistic.

One potential success story is 99 Degrees Custom. The Lawrence startup, located just upstairs from the event, went through the first Sandbox accelerator program last winter and took part in the most recent MassChallenge session, winning $100,000 in prize money. 99 Degrees does custom apparel manufacturing for retail brands and stores. It currently employs nine and hopes to grow to hundreds of people over the next few years.

Brenna Nan Schneider, the company’s founder and CEO, showed me around the manufacturing floor (pictured below), where stitchers work on custom shirts, jackets, and other clothing for customers including Williams-Sonoma (West Elm). 99 Degrees’ competitive advantage, she says, is “speed to market” based on lean manufacturing and operating processes around machining. The bottom line: end users are willing to pay more, she says, if they don’t have to wait to get their customized clothes.

Brenna Nan Schneider, CEO of 99 Degrees Custom

Schneider comes from a manufacturing family and a business background. An executive job at a “cut and sew” operation in Lowell originally brought her to the area. She seems bent on training her workers to understand lean processes and then move on to higher-paying jobs. Her hope is that the approach can help bring manufacturing jobs back to the U.S. “The model is ‘up and out,’” she says.

Like other participants in the Sandbox, she feels a personal connection to the program. “It’s a very emotional experience,” she says. “These ideas are coming out of a place—and a place that’s having a hard time. It’s more a part of your identity.”

So, what might be the lessons for social innovation in other communities? In a separate meeting, I asked Deshpande for a broader takeaway about how to get buy-in and change people’s minds in the places he’s looking to get involved.

“Use the opt-in process,” he says. “You have to start from the bottom up. Don’t start with the mayor. Do it quietly, and once it catches fire, everyone will want in… But if you try to go sell it, it won’t happen.” In other words, find a few passionate people, give them encouragement and resources, and let them make things happen.

Another interesting point: For businesses in general, Deshpande says to be careful about expanding if you’re still proving out a model. “Don’t think you could be more profitable if you scale,” he says. Instead, focus on becoming more successful in one area before going elsewhere. That point seems crucial to his strategy of testing the Sandbox model before spreading it.

Near the end of the awards ceremony, Deshpande stood up and made a few remarks to the crowd. He reminded everyone that entrepreneurship is a lonely endeavor, and that one goal of the Sandbox accelerator is to “make it less lonely.”

He also had strong words of encouragement for the entrepreneurs in the room. His message was this: Every good company has a near-death experience at some point. When yours comes, and it will, remember this evening; remember the people you see around you; seek out support from your network; fight through it and prevail.

“You are the future of the economy for all of us,” he said.

Gregory T. Huang is Xconomy's Editor in chief. E-mail him at gthuang [at] Follow @gthuang

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