Google Fiber spawns startup renaissance in Kansas City
Google's superfast Internet service launched a year ago in Kansas City. CNET's Marguerite Reardon takes a look at the impact it has on the local startup scene.
KANSAS CITY, Kan. -- The modest two-story bungalow on State Line Road looks like the typical twenty something, post-college "share house."
The house is old; the decor is very basic. Like most homes to post-college grads, it's furnished with second-hand furniture. Several fake leather recliners line the walls in the living room and a big oversized sectional couch sits in the corner, offering plenty of room for geeks with laptops to comfortably park themselves while writing code. A big white board on the wall displays the email addresses and Twitter handles of the many hackers who have stayed at the house or just passed through.
In the adjacent room, which looks like it once served as a dining room, desks set up as work stations with Ethernet cables connected directly to Google Fiber line the walls. While there is a definite odor of mustiness from the aging and worn carpet throughout the house, it's not the same spilled beer and stale cigarette smell you might expect in a house where up to five guys live at a time. There are no pizza boxes strewn around. The common areas are tidy, as per the "house rules."
It's true you won't find any raging parties here. Rather, the house is crammed with entrepreneurs working on their own projects, part of a growing local startup scene sparked by Google's superfast Internet service.
The house is the pet project of Web designer and Kansas City local Ben Barreth, who did the insane last fall and cashed in his savings and liquidated his retirement account to put a down payment on a $48,000 house in the city's Startup Village. Why? Barreth, a husband and father of two small children, wanted to be among the first to buy a house in a Google Fiber neighborhood. His plan: to offer rent-free accommodations and access to Google's superfast 1Gbps service to entrepreneurs for a three-month period.
Google Fiber has been creating quite a buzz throughout the country since Google announced its intentions to build an all-fiber network that would deliver super high-speed broadband and TV services to people at affordable prices. Kansas City was one of more than a thousand cities vying for consideration as Google's first fiber city. Google finished construction of the backbone portion of its network last summer and began holding neighborhood "rallies" to determine which communities would get Google Fiber first.
Originally, Barreth's Homes for Hackers project was supposed to match startup entrepreneurs with local people already signed up for Google Fiber. The idea was that the Google Fiber households would act as host families for the out-of-town entrepreneurs, providing them free lodging and access to Google Fiber. But when the results of the first fiber rallies were released, none of the homes that had volunteered as hacker hosts were on the initial list to get fiber. So Barreth formulated a Plan B, and decided to go where the fiber was.
While Barreth's idea of giving entrepreneurs a chance to get their ideas off the ground might be a noble one, he currently makes no money from Homes for Hackers, and he said he never expects to. He sees the program as a way to give back to his city and to help stimulate what is becoming a growing startup community in Kansas City.
"I consider myself a devout Christian," he explained. "And this is one of the ways I see that I can show God's love. I can't offer full funding or mentorship to these folks. But what I can offer is accommodations."
The startup community
The Homes for Hackers house sits on State Line Road, a busy street separating Kansas City, Missouri from its sister city Kansas City, Kansas. Inside, white boards line the walls and work stations with Ethernet jacks connecting to the Google Fiber network stand ready for use. In total, there are 18 Ethernet jacks in seven different rooms in the house providing a hard line connection to the Google Fiber network.
There's a shared kitchen and two shared bathrooms. A life-sized poster of Barreth looks down on the living room. The house sleeps up to five people, typically four startup entrepreneurs and the last spot in the house is reserved for "fiber" tourists -- people who want to visit Kansas City to check out Google Fiber and the startup scene. The room is rented for $39 a night through AirBnB.
Barreth has a very simple application process for the program. There are really only two main criteria he considers for selection. First, the entrepreneur must be serious about his or her business. Secondly, he or she must abide by the house rules, which includes not doing anything illegal in the house, being courteous to others staying in the house, no sex in the house, cleaning up after yourself, and turning the coffee pot off when you're finished with it.
Mike Demarais, 21, a native of the Boston, Mass., area, was the first resident of the Homes for Hackers program back in October. Demarais, who had considered moving to Detroit to start his company, was impressed with the ultra high-speed broadband service from Google. But he feels that the community that has formed around the Google Fiber network in Kansas City is the most compelling reason to be working on his company from Kansas City.
"We could have gone to any number of cities, but we came to Kansas City because people here will talk to us and answer our questions," he said. "If you go anywhere else, you're just hustling and hoping to be heard, instead of building your product."
At the end of his three-month stay, he went home to Boston, gathered his things and brought the rest of his team -- Alexa Nguyen, Jack Franzen, and Derek Caneja-- back with him. The four started Handprint, a software startup focused on making 3D home-printing easy.
Using all their savings, as well as money from parents and revenue from some freelance programming gigs, the Handprint group was able to cobble together enough money for a few a months rent in Kansas City. In April, the foursome won a competition offering a year's rent in a Google Fiber house sponsored by Brad Feld, a Boulder, Colo., based venture capitalist. Like Barreth, Feld bought a house in the first Google "fiberhood" in the hopes of encouraging tech entrepreneurs to build apps that use gigabit speed networks.
It takes a village
The Homes for Hackers house sits right in the middle of what has become known as the Kansas City Startup Village. This grass roots initiative sprang to life after Google selected the neighborhood, Hanover Heights, as the first community to get Google Fiber service.
Even though the 1Gbps service is designed and marketed toward residential customers. Startups in the area, many of which were already based out of people's homes, saw the value in super-high speeds. And they quickly began buying and renting houses in the neighborhood.
Leap2, a mobile search company, was among the first companies to put roots down in Hanover Heights. Tyler Van Winkle, director of product development and marketing for Leap2, said his company already had office space in a nearby neighborhood, but the company really wanted access to the cheap ultra high-speed broadband Google was offering. So they rented a house on State Line Road.
Since there was still plenty of room in the house and plenty of bandwidth to go around, Leap2 invited other startups to join them. The company's house on State Line Road is now home to three other startups: Local Ruckus, Form Zapper, and Rivet Creative.
Since then, others have also joined the community. And today, there are nearly two dozen startups within walking distance of each other. Startups have also begun flocking to other parts of the city where Google Fiber is being deployed.
Barreth says that the hackers in his house typically experience upload and download speeds between 800 and 900 Mbps when connected to the network via Ethernet. And when using the in-home Wi-Fi network, they can get upload and download speeds around 150Mbps.
The advantages of superfast broadband for technology startups are many. They can share big files over the network, upload large chunks of data in seconds, and collaborate with remote workers or partners via video conference seamlessly.
But Barreth and others in the Startup Village will admit that Google's gigabit speed network is overkill. Leap2's Van Winkle said that he'd still be able develop his company's app using far slower speeds than what Google is offering. But he said, having nearly a Gigabit worth of capacity makes some aspects of the job easier and faster. And the $70 price tag simply can't be beat.
"We have between five and 15 people on one Google Fiber connection at any one time," Van Winkle said. "And we don't even make a dent in the connection. So even though all that capacity isn't necessary, we never have to worry about how much bandwidth we are using, no matter what what we're doing."
Chris Baran, who currently lives in the Homes for Hackers house, said what he likes best about Google's service is its upload speeds, which are the same as its superfast download speeds. Most other broadband services from a cable operator or phone company might offer decent download speeds, but the service is not symmetrical meaning that the upload speeds are typically only a fraction of the download speed.
But Van Winkle said the real value of Google Fiber is that it's not only attracted a new group of entrepreneurs to Kansas City, but it has also brought the existing community together in closer proximity.
"Access to the gigabit network is nice," he said. "But it's more about the community that has grown up around the network. It's really helpful to be around a lot of like minded people who support each other."
Van Winkle said it's common for a programmer to walk down the dirt path behind the house, which leads to several other hacker houses to collaborate with someone from a different company to hash out technical problems. The companies and entrepreneurs also share other pointers, such as how to negotiate investment terms with interested VCs.
Kansas City, a hot bed for entrepreneurship?
Kansas City may not have the same cachet in the startup community as Silicon Valley or Boston, but the city has been fostering local entrepreneurs for years. And several technology companies have come up through the ranks there, including wireless operator Sprint Nextel, healthcare technology company Cerner, and GPS navigation provider Garmin.
Not only is the city home to the Silicon Prairie Technology Association, which was started in the early 1990s, but it's also home to the Kauffman Foundation, a non-profit foundation started nearly 50 years ago with an asset base of $2 billion that is focused on fostering entrepreneurship.
The Kauffman Foundation provides grants and mentorship opportunities to entrepreneurs as well as hosts several programs, including the weekly networking event 1 Million Cups. It is also a strong supporter of the Kansas City Startup Village and Barreth's Homes for Hackers.
Van Winkle, 31, who has spent his whole life in Kansas City, said the city's startup scene was growing even before Google arrived with its fiber service, but he admits that Google has likely accelerated growth in the community.
"Google Fiber was definitely a catalyst to spur more interest," he said. "But there was already a lot going on here, even before Google."
Indeed, Google Fiber has gotten a lot of buzz, but it's still too early to say if the new network will have a lasting effect on local economy.
Unlike startup havens, such as Boston and New York on the East coast and Silicon Valley on the West Coast, there aren't a lot of venture investors in Kansas City -- or the Midwest, for that matter. That's not to say that there isn't any venture investing going on. Leap2 recently announced a $1.3 million round of funding. But so far none of the startups in the area have made it big.
"What we really need now is for some of the startups to have really big exits," Van Winkle said. "That establishes credibility in the market. And that's what we really need right now to attract more investors."
Still, even if Kansas City doesn't become the next Silicon Valley, it could prove a valuable playground, especially for young entrepreneurs like Handprint's Mike Demarais.
For him and other young startup founders, Kansas City offers a perfect opportunity to learn and actually try to build a business. And because of the low cost of living, it's a slightly more forgiving place in which to fail.
"I can't imagine trying to compete for any attention in the Valley or Boston right now," Demarais said. "I mean every kid at MIT and Stanford is building a startup out of their dorm room. It's hard to get anyone's attention. But here, it's still a tight-knit group, and people will talk to you and offer advice."
It's that sense of community and the super-high broadband speeds that will likely give Kansas City a leg up over other communities struggling to revitalize their economies. But as Google moves onto other cities such as Provo, Utah, and Austin, Texas, it will be interesting to see whether Google Fiber has the same effect on the startup scenes in those cities.
"The best asset that Kansas City has are its people," Barreth said. "But we need more tech talent and new people with good ideas in the local scene. The expectation is that the people who come through the Homes for Hackers program end up staying here for a long time."