The Re-emergence of Y-Town and the Success of YBI

The Re-emergence of Y-Town
And the success of the Youngstown Business Incubator

By John Benson

If you can imagine the Rust Belt cities being connected to one another by veins, the streaks linking Cleveland to Youngstown have been, well, rusting and decomposing for a while. However, over the past decade there’s been a slow resurgence of growth taking place in Youngstown that has attracted national and global attention (NPR, The Economist and Inc. magazine).

The visionary behind this renaissance of sorts is Youngstown Business Incubator CEO Jim Cossler [pictured], who grew up in Mahoning County but now calls Aurora home. 2011 marked an exciting year for YBI. According to Cossler, “Channel One, based in New York City and a CBS Partner Company, is the leading educational news content provider nationwide for teens. Promethean, headquarted in London, England, is the world’s largest provider of smart board technology to education. Together, the two companies are globally deploying a new educational tool for schools called Channel One News Interactiv.

“And where is the fully staffed Network Operations Center managing the deployment?,” asks Cossler. “On the YBI campus in Youngstown, Ohio. And who wrote the enabling software for Channel One New Interactiv? YBI Portfolio Company Perkins Communications in Youngstown, Ohio.”

Exciting stuff, huh? Cool Cleveland talked to Cossler about his incubator model that has turned Youngstown into a shining example of success.

Cool Cleveland: First of all, explain the notion of an incubator as it relates to your organization.

Jim Cossler: In short, we are a managed technology cluster for business-to-business software application companies that has an incubator as its catalytic company creation engine. So the differentiation of what we’re doing here compared to any other place in the country is, we just do one thing. All we do is software, and we don’t graduate our companies. We’re moving our companies from incubation to acceleration to becoming commercial tenants on a software cluster campus that we’re building in downtown Youngstown. We currently have a three building campus, and we’ll be opening our fourth building in July of next year. Our buildings are completely full and the companies that are on campus with us have about 360 employees and last year they did about $52 million in global software sales. We expect about a 20 percent increase by the end of this year.

How are you able to fund the incubator?

A couple of ways. We own about $22 million worth of real estate and none of our buildings carry a mortgage. None of our buildings have any debt. We’ve been able to either build them new or renovate them almost entirely with state and federal funds. And they’re fully occupied by commercial software companies that went through incubation and acceleration. So if you talk to anyone in real estate that owns a building without a mortgage and 100 percent of it is leased, that’s a very profitable building. So our real estate is our revenue stream. We’re funded by the state through a number of initiatives like the Ohio Third Frontier program. They provide about $450,000 a year in funding and we’re also 501(c)3 charitable non-profit, so we’re also funded by corporate gifts and foundation grants.

Back to your tenants. These are start-up software companies who get what free and for how long?

Until we get them to a sustained level of profitability, everything is free. We just want jobs created in Youngstown. We don’t take equity in our companies. You can’t legally force a company to stay anywhere. This campus has so many resources no one ever wants to leave. Until we get them to a sustained level of profitability, we don’t charge for office space. We buy their office furniture for them. Their internet connectivity is free. We’ll bill them for things like telephone services, postage and printing. But we’ll tell them don’t worry about paying the bill until you can afford it. They have a tremendous amount of shared equipment. They can use trade show displays and a computer software-testing laboratory. We have every imaginable resource and tool that a startup early stage software company needs but typically can’t afford. They’re given as much space as they need.

So just as the once steel-driven Pittsburgh has become a medical technology hub, and Silicon Valley is, well, Silicon Valley, you’ve turned Youngstown into an epicenter for creative software?

Here’s the reason it works. It’s absolutely irrelevant where a software company is located and the reason is because the customer doesn’t care. No one demands to know the physical location of a software company’s headquarters before they download the app. It’s never been part of the buying equation. So if location is irrelevant, why in God’s name do you want to be in the Silicon Valley where office space is $200 a square foot and it’s $8 in Youngstown? And why do you want to hire a Silicon Valley software engineer at $140,000 annually when that same talent can be hired in Northeast Ohio for $50,000 to $60,000, when your customers don’t care where you’re located?

Finally, it sounds like things are happening in Youngstown.

I understand people thinking what they think about Youngstown; that’s the old Youngstown. There’s a decidedly new Youngstown now.

For more information, visit http://YBI.org.


Freelance writer John Benson spends most of his time writing for various papers throughout Northeast Ohio.

When he’s not writing about music or entertainment, he can be found coaching his two boys in basketball, football and baseball or watching movies with his lovely wife, Maria. John also occasionally writes for CoolCleveland.com.

 

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