RPI President Martin Schmidt has already helped grow one of the world’s great centers of innovation. Now he wants the same for Troy and the region.
This article originally appeared in the Albany Business Review.
It’s 40 years from now and Troy is a different city. Downtown buildings are teeming with entrepreneurship, part of an ecosystem of companies that have spun out of Rensselaer Polytechnic Institute, the University at Albany and other area institutions, and stuck around.
Those company’s founders probably went through downtown’s incubator program, which helps startups become full-fledged companies. Their continued presence leads to more venture capital moving into the area, which in turn lures other innovative companies to Troy.
The workers cultivate an even more vibrant urban environment — more restaurants and shops — and more people want to live downtown than ever before to be near the heartbeat of innovation.
That’s the vision RPI President Martin Schmidt and Rensselaer County Industrial Development Agency CEO Robert Pasinella have for the city. And to make it happen, the work needs to start today.
“Now is the time. We can’t allow a regression of losing the workers, losing the students that are graduating, the entrepreneurial students who say, ‘We want a vibrant downtown in order to locate our business,’” Pasinella said. “Catalyzing that is stepping up when there’s a void, and the void was these real estate properties are vacant or becoming vacant or being foreclosed on.”
Pasinella and Schmidt see the potential to turn Troy (and eventually the region) into an innovation powerhouse, creating jobs and redefining the area’s culture. The pieces are here: the real estate, the research institutions and some innovative companies, such as the video game cluster in downtown Troy.
The plan is inspired by Schmidt’s 40 years spent at MIT, including as provost, and his experience helping to build the legendary Kendall Square in Cambridge, which is now hailed as “the most innovative square mile on the planet.” The life sciences and tech hub is a collection of academia, companies, startups and accelerators/incubators that have transformed what was formerly a parking lot district into a shining example of what collaboration and vision can accomplish.
The first step toward that vision for Troy is the creation of a downtown startup incubator – a move Schmidt knows can work based on his MIT experience.
“If you go back and you look at [Kendall Square], one of the first things that happened in support of entrepreneurship in the region was the creation of the Cambridge Innovation Center,” Schmidt said.
Located in the Quackenbush Building at the corner of Broadway and Third Street, the Troy incubator would be a place for area startups to access the region’s academic resources. Schmidt and Pasinella are working to make it a reality.
The goal, aside from spinning out more innovation from the universities, is to reconnect the city with RPI.
“Many of our students leave the Capital Region right now – RPI students – but I don’t see why they wouldn’t stay if the right opportunities were here,” Schmidt said.
What’s been done
Though a physical space designed for innovation is on the horizon, that’s just the more apparent milestone that Schmidt, his team at the university and other stakeholders have been working toward behind the scenes.
Schmidt said it’s important for RPI and its people to be where innovation is happening – whether that’s on its Troy campus or elsewhere. For example, the university recently signed a lease at the Albany Nanotech Complex for 6,000 square feet in the semiconductor research facility.
“We’ve been hunting for areas where this region can collaborate, to create growth. Chips is kind of a no-brainer,” he said. “It’s the watercooler. Everybody that wants to do anything has to come to Albany and has to go through that building.”
RPI has also created RPI Ventures, a new office that includes the Severino Center for Technological Entrepreneurship — the university’s entrepreneurship program — as well as a $10 million early-stage startup fund and a brain trust of advisers/coaches, industry experts and professional services firms for students and faculty to access.
Part of that office includes new startup incubators, one on campus and one off.
The off-campus incubator hinged on the right real estate opportunity. That’s when the Rensselaer County Industrial Development Agency came into play.
The IDA closed on the purchase of the Quackenbush Building in April, which is home to the Tech Valley Center of Gravity makerspace and a group of tech companies. Pasinella, CEO of the IDA, wants to solidify the building’s status as a landing spot for tech companies, making it an ideal location for RPI’s incubator.
“We finally put our stake in the ground,” he said. “The pandemic and the post-pandemic real estate issues created an opportunity to say, ‘We’ve got the ability to acquire the building, we’ve got the ability to partner with Marty and company, and now we can start to execute the vision’ … It will help revive downtown and bring downtown to at least the partnership that RPI and downtown Troy had at least 30, 40, 50 years ago.”
The planned incubator would occupy the entire fourth floor of the building.
Schmidt said the center would be inspired by The Engine at MIT, an accelerator program, and the Cambridge Innovation Center, a startup-centered coworking space. To make that work, Schmidt plans to make it a collaboration between UAlbany, Hudson Valley Community College and other local institutions to pool the region’s resources.
The idea is to create blanket agreements with the other institutions to give startups access to resources for only a usage fee.
“The point is to take the friction out,” Schmidt said. “What you don’t want to do is have a startup say, ‘Oh, I need RPI’s scanning electron microscope, I need UAlbany’s cell culture facility. And oh, GE Vernova has some really amazing imaging capability, right? And then I’ve got to go find who I need to talk to, negotiate for years.’ We just want to smooth those paths.”
It wouldn’t be the first time the university had an incubator space. A previous on-campus incubator was a key resource for an earlier wave of the area’s blockbuster companies, said Guha Bala, co-founder and president of Troy-based video game company Velan Studios.
Those companies included the likes of MapInfo, Etransmedia, GlobalSpec and Ecovative, to name a few.
“The reality is entrepreneurs just need other people that are going through the same experience, that they sit next to, to convince them they’re not crazy turning away that lucrative job, that it’s OK to be a little insane and take some risks … the simple factors like that – it’s not all the capital,” Bala said.
The incubator was key in launching Vicarious Visions, the first video game company Bala and his brother, Karthik, started. The connections there introduced the brothers to their first angel investors.
Vicarious Visions, which worked on such games as Guitar Hero and Skylanders, was later sold to industry giant Activision in 2005.
The incubator closed in 2010 after three decades of operation.The loss was noticeable, Bala said.
“The flow of companies just stopped out of RPI. It was like a faucet shut off. And yes, there have been others that have come out since then. But the pipeline has been just drips,” he said.
Now, the opportunity is different. Bala said RPI has better transportation into downtown and the city has developed into a place students want to hang out.
“Doing [an incubator] downtown is a big deal. I think that that will be amazing for games. That will be amazing for multiple industries as well,” he said.
What else needs to happen
To get this idea off the ground, the next hurdle is funding for both facilities upgrades at the Quackenbush Building and an investment fund, Schmidt said.
The facility itself needs dollars behind it until it can be self-sustaining. And planning is still underway for what it might actually look like.
Because the incubator has a regional focus, the money for the investment fund needs to come from the right stakeholders – people and organizations in the area that could benefit from having successful companies come out of it.
Take Kendall Square, for example.
“If you look at people that are involved with The Engine, one of the things you’ll notice is Bob Kraft, owner of the New England Patriots. If you’re the owner of the New England Patriots, you’d like to make sure there’s more Patriots fans,” Schmidt said. “I think the question really is, who cares about downtown Troy, having something like this, and who’s willing to support it?”
Schmidt said that includes companies that would spin out startups. Rather than keep innovative ideas in house, they could set up spin-offs to grow on their own in the incubator.
It’ll also require buy-in from existing area startups. Sean Austin, co-founder and CEO of Markets EQ, has been working to build his artificial intelligence-focused startup in the region, and as an RPI alumnus, he heard about the legendary incubator that shut down before he was in school.
Markets EQ just joined the UAlbany incubator to be closer to other companies and have better access to resources. Austin said convincing the next generation of founders who are used to remote work could be another challenge in getting the Troy incubator off the ground.
To him, the plan is better than doing nothing, which he described as a “detrimental” alternative.
“I think it just has to be talked about and champion the wins and keep showing it and having cool stories. That’s what I heard from Guha [Bala] and them as I was the young one coming in with these mythical stories of, like, MapInfo,” he said. “I think that’s what gets especially younger kids really interested in not so much making a billion dollars but making really cool companies and cool technologies and knowing that it’s possible.”
The long-term vision
The vision for downtown Troy and the region is more than the incubator – that is just the beginning. It took Kendall Square four decades to evolve into what it is today, even when all the factors and stakeholders aligned.
Schmidt’s hope is that the incubator creates “stickiness” and encourages new companies to stay in the area. If they do, that would lead to more venture capital, which would create a domino effect of incentivizing more businesses to relocate or open offices here.
Pasinella said the incubator creates potential opportunities for more collaboration with local companies, like Regeneron and GE.
“These guys create technologies that if the company doesn’t want to move into that [product area], then entrepreneurs should be able to pick [it] up. That’s when you get that vibrancy,” he said.
Pasinella’s already thinking beyond the Quackenbush Building. He sees the IDA driving the real estate for this vision and thinks the chance to reshape the future of downtown Troy is here now.
“You can’t just blindly, say, ‘Here, somebody else do it.’ You have to be active and that’s what Marty’s doing — rolling up your sleeves and digging in and saying, ‘This is what we need to do,’” he said. “The 4,000 or whatever initial square foot at the Quackenbush, if we fill that up fairly quickly, what’s next? Where’s the next building? And I’ve got my eye on the next piece of property that we can move the growth toward.”
Schmidt sees this project as the start of a larger economic journey for the region. He’s a subscriber to the theory outlined in “Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream” by Jonathan Gruber and Simon Johnson: That the U.S. economy cannot survive on a handful of superstar metros alone and midsize cities are positioned to grow.
That book included a study that ranked the Capital Region 16th out of 100 areas with the capacity to take off. Schmidt thinks it should be ranked higher.
“[The idea is] institutions that are deeply committed to the region that can think long term coming together, which is the story of Kendall Square,” Schmidt said.
To him that means thinking about the long-term impacts of these innovation plans. In other words, what if this idea actually works?
So, he’s having conversations with organizations such as Unity House and the Albany International Airport to think bigger – meeting with institutions that are by definition committed to the region and have to think about the future to operate.
These are organizations that Schmidt said are interested in the successful future of the region – no matter what it looks like.
“If things really catch on fire in 40 years, do we have the right transportation infrastructure? Do we have the right housing infrastructure? Do we have the right child care facilities that work? You don’t build it now for 40 years from now, but you plan it,” Schmidt said. “In my mind, focus on what are the technology plays that get us there, that we should think about and work on the next five years, and then things will start.