STARTUP IN A BOX

URBAN-X CASE STUDY: THE EXPERTS-IN-RESIDENCE PROGRAM


MINI. The name is synonymous with the Mini Cooper, an icon of automotive engineering and minimalist design second only to the Ford Model T. Later acquired by the BMW Group, the car was relaunched in 2000 as an urbane alternative to increasingly hulking competitors.


A decade later, BMW recruited a new leadership team to grapple with MINI’s legacy — was it really an automotive brand or a lifestyle one, built on the values of stylishly compact efficiency in cities? And if the latter were true, what was the best strategy for unlocking its latent potential?

By then, most automakers (including BMW) had embraced the startup- and venture capital accelerator model as a means of placing bets on potentially disruptive technologies while keeping tabs on the shifting mobility landscape, and the larger context of cities in which this change is happening. The MINI team endeavored to ask fundamentally different questions. If MINI was a quintessentially urban brand, for instance, how could they leverage its heritage and expertise to improve cities’ quality of life? What lessons could the company learn about its business in the process? And who were the experts inside and outside MINI who could help bridge the gap between the automotive ecosystem, startups, and the smart cities?


Sir Alex Issigonis, inventor of the iconic MINI, took a decidedly human-centric approach to car design. For his first MINI developed in 1957 he is said to have sat four people on the floor with their luggage and to have drawn a line around them - which became the footprint of the car.




The MINI team quickly realized a technology-first approach wouldn’t fly. While automakers had invested billions in electric- and autonomous vehicle startups and technology firms chased a data-driven vision of “smart cities,” neither approach had proven successful in solving the interrelated urban challenges of mobility, affordability, and sustainability.

They also clashed with MINI’s original vision, which was not a technology first approach, but a car designed from the bottom-up to meet the needs of middle-class Britons — an early example of what has come to be known as “human-centered design.” Made famous by the industrial design firm IDEO, this philosophy places users first — ahead of technology — and challenges innovators to study, understand, and meet their needs.

Finally, would-be smart cities also failed to recognize cities’ complexity, a system- of-systems no automaker or tech company — no matter how large or well-capitalized — could map to their organizational silos. Refocusing MINI as an innovative urban mobility company would require tapping networks of expertise well outside the firm.

This raised another question: would startups and VCs be interested in tackling that complexity, which not only encompasses hardware and software, but also a whole host of governance and regulatory issues, public entities with large budgets but long lead times, and residents who may not be their customers, but are very much stakeholders in the public realm?

Lacking definitive answers, MINI decided to forge ahead in the spirit of a ‘lean startup’. In late 2015, it launched URBAN-X — a first-of-its-kind urbantech accelerator in New York City aimed at fledgling startups that are reimagining city life – inclusive of but not limited to mobility . Leveraging an international network of entrepreneurs and investors and a rudimentary website and tagline (“Engineering Cities as a Service”), the initial call for applications offered three things: cash; office space; and the services of MINI’s own engineers and designers. More than 80 startups applied; seven were chosen.

One of those engineers was Johan Schwind, a former BMW designer who is now design director at URBAN-X and leader of the experts-in-residence (EIRs), an in-house team of six hands-on UX and UI designers, software developers, mechanical and electrical engineers, and specialists in working with cities — no automotive experience required. “We quickly realized we’re not really the experts in any of this, and never would be, because cities are too complex,” says Schwind. “If that was the case, we needed to partner with experts in very specific things, who would hopefully provide missing pieces of the puzzle.”

By design, the startups applying to URBAN-X were at the beginning of their journeys. The program assumed most founders possess deep, but narrow expertise in their particular domain and technology while lacking critical knowledge of business model and go to market plan, their brand, their product design roadmap, and manufacturing plan. The EIRs would plug those gaps while helping teams determine their longer-term staffing goals and needs.

Dean DiPietro, for instance, is an industrial designer with twenty years of experience creating dozens of consumer products sold around the world. A virtuoso of engineering, prototyping, and sourcing, his greatest skill is “understanding what it takes to bring something from a sketch to a product that ships to people’s doorsteps from Amazon,” says Schwind.



During the program, startup teams and EIRs convene on a weekly basis to discuss progress and collaboratively solve challenges.


Similarly, creative director Michael Sharp not only works with teams to hone their visual identities, but also to ask more strategic questions about their brand values. “Sometimes, it’s true they have a unique product,” says Sharp. “But what if they don’t? In those cases, they have to fall back on what they stand for — and knowing that is more valuable than any logo.”

After a half-dozen cohorts, the initial team of three has expanded to five. Software developer James Calhoun fills a role analogous to DiPietro’s, drawing upon the breadth of his expertise in development environments to guide teams in defining their own software architecture and roadmap. Karol Munoz’s greatest strength in UI/UX design is her ability to rapidly iterate and test different versions of an interface — a skill that is key to the program’s entire philosophy.

DEFINE, PROTOTYPE, TEST,
LEARN, REPEAT.

More than simply being a resource to teams, the EIRs play a pivotal role in teaching the URBAN-X development process, which can be summarized in just five words: define; prototype; test; learn; repeat.

Drawing on both human-centered design and the agile, iterative approach favored by lean startup proponents, this process emphasizes rapid refinement to gauge product- market-fit. It’s the EIRs’ job to shepherd teams through this cycle as quickly as possible, thus increasing the chances of building a viable product that customers love by Demo Day, attracting funding, and maximizing the time and resources spent while at URBAN-X.

Empathize & Define
Customer Research
Features
Requirements
Ideate & Build
Customer Research
Features
Requirements
Test & Learn
User Testing
Documentation





To speed the teams along their way, the EIRs preach three additional tenets:


FIRST, LISTEN
TO CUSTOMERS.

The urbanist and activist Jane Jacobs once wrote that “cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.” Jacobs’ struggles against top-down urban renewal “solutions” should be instructive for startups.

For teams built around a potentially path-breaking technology, this can be a humbling experience. “Founders probably spend 90% of their life with their product, but an end user may spend 1% of theirs – and that’s the absolute best case,” says Schwind. Understanding their desires, needs, contexts and intentions is central to transforming a promising idea into a value proposition and eventually a product.

For B2B startups, this may be as simple as drafting a hypothesis, designing even a rough sketch of the product, and having concrete conversations with customers — from which they can obtain useful feedback. More creativity is required for consumer products, especially in the absence of formal research or field ethnography due to financial constraints.





In the case of Park & Diamond — a Cohort 04 company selling a foldable bicycle helmet more visually akin to a baseball cap — this meant lots of impromptu “hallway testing.” Prototypes drop-shipped from China were pressed into the hands of willing test subjects near URBAN-X headquarters in Brooklyn, from which the founders gained feedback on usability and ergonomics. A much steeper test was launching an Indiegogo crowdfunding campaign — a decision that was less about raising cash than user testing at scale with real money at stake. (Their campaign has booked $2.5M and over 23,000 pre-orders to date.)



BE NEED-SPECIFIC,
TECHNOLOGY-AGNOSTIC.

Put another way, URBAN-X invests in teams obsessed with solving urban challenges rather than seeking problems to solve with a pet technology. The former possesses several undeniable advantages: a willingness to play to the skills and strengths of their team; fiscal discipline that rejects too-costly solutions; and a laser-focus on users’ needs, rather than succumbing to a founder’s inflexibility or ego.
Once again, this lesson can be a bitter pill for teams to swallow, especially after investing significant time and energy on their current path. It falls to the EIRs to convince them there may be a better, faster, cheaper approach, and to help them pivot smoothly to a more cost- effective solution and/or better product-market fit.
One such example is Sapient Industries, another Cohort 04 startup focused on building an autonomous energy management system capable of learning from human behavior to eliminate electricity waste in large buildings. The team entered the program convinced they needed to spend $700,000 to build a working prototype of a smart power outlet — a considerable
sum for a pre-seed startup. This strategy would have also consumed months of work with few opportunities for testing — a potentially fatal path if their hypothesis proved incorrect.

Instead of developing proprietary hardware, the team worked closely with DiPietro to source commodity components, significantly reducing the time, costs, and risk involved in producing a viable product. Sapient is in an enviable position as a result — with customers, revenues and a record setting fundraise on investment platform Republic rather than uncertainty about their endeavors.



EMBRACE
OFF-THE-SHELF.

Rethinking everything doesn’t mean reinventing the wheel. While it’s tempting for startups to innovate at every step of the development process, in practice it drastically increases the risk of systemic failure. Successful teams understand where to draw the line between features that matter and aspects of the business that don’t — and to focus all their creative energies on the former while falling back on best practices and off-the-shelf components for the latter.
At URBAN-X, “not invented here” is a strategy, not a dirty word. The EIRs encourage teams to embrace open source software and hardware whenever possible, and to begin prototyping with pure commodities if necessary. Toggle, for example, is a Cohort 05 member deploying industrial robots to cheaply and safely accelerate the assembly of steel rebar for reinforced concrete. Taking this philosophy to the extreme, the team’s earliest efforts contained no proprietary technology at all. They simply combined a pair of existing ones — an off-the-shelf robot and a wire-tying tool — to create the first iteration of a novel invention.

EIR TEAM CAPABILITIES

WHAT HAVE WE LEARNED?

Now in their sixth cohort, the Experts-in-Residence have become an URBAN-X signature and one of its highest-rated features, according to post-residency surveys by graduating teams.

After three years and working with 45 startups, the EIRs have learned hard-won lessons they’re willing to share with founders and corporate accelerators alike. Here are a few for each group, starting with founders:

1. Teams must own the process; EIRs help navigate.

Teams expecting the EIRs to do their work for them have been sorely disappointed, says URBAN-X program director Miriam Roure. It’s up to the founders to identify the gaps in their own expertise, ask for resources, and put in the work necessary to bring development roadblocks to light. “You can’t come in without a clear agenda,” says Roure. “You can only get what you put into it.”

2. Don’t waste their time — and yours.

Time is a founder’s most valuable asset, and teaching them how to spend it for maximum output is one of the program’s hallmarks. Just as startups shouldn’t try to innovate everywhere at once, founders should take the same approach with EIRs — understand your priorities within the cohort’s time constraints and push forward accordingly. Don’t ask them to fix your entire business in just 20 weeks.

3. Know what to bring inside and who to work with outside.

Just as teams can’t do it all, they can’t hire them all, either, or at least not at the beginning. A critical skill for startups is knowing when to hire with limited resources, and knowing when and how to engage external expertise — whether consultants, mentors, contractors, or experts-in-residence. “The program is excellent practice in learning how to work with people who don’t actually work for you,” says Roure



URBAN-X has been educational for MINI and the BMW Group as well. Here are two lessons Schwind and Roure have learned from working with teams:

1. Autonomy vs. Hierarchy.

Like the startups they work for, individual EIRs define their own roles and responsibilities. “I don’t interfere with what Dean DiPietro is doing, nor does he report to me, but the work gets done and we’re always on the same page” says Schwind. Given this level of autonomy, coupled with close communication between team members, the EIRs excel at solving difficult problems quickly in the absence of hierarchy. While this approach has difficulty at scale, it does hold lessons for companies. “In order to work inside a big company, the organization has to create pockets where this kind of work is possible,” says Schwind.

2. Prototyping vs. Procuring.

Just as the EIRs are able to move quickly due to their cross-disciplinary expertise instead of siloed responsibilities, they’re also able to rapidly prototype and test ideas because they’re free from the supply constraints of their parent company. “We have the authority to buy off the shelf tech on Alibaba or Amazon, have it shipped overnight, and get to work on it the next day,” Schwind explains. “That’s impossible inside a large organization with strict guidelines for procurement, where you’ll lose three weeks of testing.”

As URBAN-X has demonstrated, startup accelerators can be a sandbox for organizations seeking safe ways to learn quickly, move even faster, and bring outside expertise in residence. With 8 out of 10 teams having raised their next round of funding post-program, URBAN-X proves its efficacy not only as a method to garner insights and participate in the future of cities but also as an investment instrument.

To learn more about the URBAN-X program and the Experts- in-Residence, visit www.urban-x.com/program


By URBAN-X, with contributions from Johan Schwind, Michael Sharp, and Miriam Roure.