As the point man on Marty Walsh’s staff, Dan Koh is part of a dynamic…
The Well Done Man – John Harthorne
Only from WDB, The Well Done Man is a biographical interview with a Bostonian who is doing exceptional things. It is meant to give insight and knowledge regarding each interviewee’s vision of success and how, beyond their obvious talents, they have reached this point in their lives and careers.
John Harthorne is Founder and CEO of MassChallenge, the most startup-friendly accelerator on the planet. Born out of the great recession, MassChallenge is challenging the typical accelerator model of requiring equity from its startups and setting its sights on empowering a new breed of leaders that are focused on long-term, global impact and economic responsibility. Since founding the Boston-based accelerator in 2009, Harthorne has guided the launch of programs in four additional cities (London, Jerusalem, Lausanne and Mexico City) and alumni have raised over $1.1 billion in funding, generated more than $520 million in revenue and created over 6,500 jobs.
Can you tell us a little about yourself?
I am born and raised in Massachusetts. My father is from here and my mother moved here from Germany. They met at Mass General Hospital where my dad was a cardiologist. He was also a professor at Harvard so I would spend a lot of time with him walking around the hospital and the Harvard campus and that instilled in me a real love for learning. I loved trying new things and learning as much as I could as quickly as I could. I also traveled a lot when I was young which really helped to fuel that fire.
I went to high school at Deerfield Academy in Western Mass and eventually went to college at Bowdoin College in Maine. I studied German literature with a minor in chemistry then I did a Masters Degree in Berlin Germany on European Political Culture and I lived there for a couple years. After that I figured I could be a Diplomat so I moved to New York to work at the UN for a bit. I learned there that I actually didn’t like diplomacy because there was too much bureaucracy, paper pushing and following orders that I didn’t agree with. At that point I wanted to switch tracks and get more into a business setting so I came back up to Boston. I could still speak German fluently and started doing translations to make money working for a company in Cambridge called Robert Bentley Publishers. We translated all the Volkswagen and Audi repair manuals from German to English as well as a few coffee table books like the the history of Porsche and BMW, so that was fun and I got to learn a lot about cars and technical German.
That was right around the year 2000 and the height of the internet boom and I ended up meeting somebody on a plane who was working at a tech startup in Kendall Square. I saw the success that people were having on the internet and I’m kind of a closet geek and good with computers so I started thinking that was my next move. I met somebody that worked at a computer security startup called @Stake, we swapped business cards and like three days later they made me a job offer for 2x my current salary doing something that I knew nothing about. That was the height of internet opulence and it was really easy to make money without any training. When I got there they just put a book on my desk and said you don’t have to be billable for 9 months we just want you to learn. So I got really skilled at computer security stuff. I would never be as good as the hardcore hackers but I could hold my own on a project – I brought down eBay for like 3 hours once. When @Stake started a training department they put me in charge of that because I could speak and I was presentable. They could put somebody like me in front of Fidelity or other corporate customers so I became sort of the face for their hackers. I probably logged 200,000 miles over 3 years, going to places like in Asia and Europe. I fell in love with the startup environment there but eventually I really wanted to work with technology strategy instead of actually coding the technology.
In 2003 I decided to apply to Business Schools to get a degree in management. I really wanted to go to MIT because I thought it had the best values and integrity of any school that I had ever encountered. The whole business school process was super helpful for me. During the application process I realized the reason why I had done all these little things is because I’m really addicted to learning and the second I feel like I’ve figured something out I’m no longer really interested in it. I’m never really happy at a job if I feel like I’m just a cog in a machine and I have to believe my work matters. Also, I realized that I liked teaching and I was happiest when I was empowering people, which was a bit of a surprise to me.
I was really excited when I got into MIT and to get focused and off this wayward path that I had been on. So I went to the first big mixer and I saw a bunch of engineers just sort of standing around looking at their feet so I went over and starting introducing myself and asking people what they did. The first guy was like “I’m bringing solar thermal energy to sub-Saharan Africa – and I built a solar thermal generator out of used car parts that cost less than $200 to produce and can be repaired with things that can all be found in and around the communities we serve, like old cars and bikes and things. It will power a small village so that they can have lights at night for reading and warm water for showers and cooking and things like that.” I was like “wow that’s amazing!” The next guy said he was creating a system to remove arsenic from drinking water in Bangladesh — addressing the largest mass poisoning in history. His system cost around $2 to produce and is made with 2 plastic buckets and rusty nails. It will prevent tens of thousand of children from going blind and becoming ill over the next 5 years. Everybody I talked to had this amazing thing that they were working on and I was like “oh, well I was thinking I might be a consultant.” I felt so guilty and small. That was like a massive epiphany because I didn’t know we could just decide to do awesome stuff or that people were allowed to be amazing. Clearly these people were smart but I wasn’t blown away by their intelligence. It was much more about goal setting and deciding what was important to them and the values that they wanted to express.
I really fell in love with startups and got really inspired at MIT. I won a bunch of awards including the startup competition and the business plan competition at MIT as well as a prize from the president for a conference I ran on entrepreneurship. So startups were my passion but I also graduated with $150,000 in debt and I was married with a one year old so I decided to go into consulting for a bit. I figured if I could stay for a year and get my first big bonus I could then leave and join a startup. The problem was that I graduated in 2007 so my first big bonus was in December 2008 and that was the worst time economically in living memory. The Dow was dropping 300 points a day and had gone from 13,100 when I graduated in 2007 to below 9000 in 2008 and by March of 2009 it was below 7000. So the world lost like half its value during that period. Now I had 2 kids and I hadn’t really paid down a lot of my debt because I didn’t love my job and you’ve got to kind of bribe your soul when you do something you don’t like. I bought a nice car, new clothes and bought people drinks and just kind of threw it all away. Now I was thinking I’m going to be a consultant for the rest of my life. When I got out of school I was so optimistic. I was on top of the world and thought I could redefine everything and that was like the happiest time of my life.
I was lying in bed one night at like 3am just exhausted and mad at the world and full of self-pity. I really was very very unhappy. I started thinking about what happened, how did the world collapse in such a short period of time and what I figured out was that it was really was just greed. Too many people taking profit out without enough people creating value first. I believe in capitalism and I believe people should get rich but you have to earn it, you can’t just take it. You do something valuable for the world and in return you get to keep a share of the value you created. Even at MIT, which I adore, most of the business strategy is oriented around how you capture more of the existing pie, taking more from your employees, your suppliers, your customers. It’s kind of a screwed up thing. In the business world there is a basic assumption that the amount of value in the world is fixed and we are all fighting over who gets the biggest piece from the existing pie. Why don’t we just make more pie?
So I half fell asleep that night thinking “somebody has to fix this.” I woke up a few hours later to an adrenaline shot to the heart sort of moment. I still remember the temperature in the room and the sounds of the street and everything and I had this very clear recognition in my head that “Hey, I’m somebody. Why don’t I do it?” The whole problem is that no one is addressing the underlying cultural problem. I went to MIT which is one of the most prolific sources of innovation and value in the world. What if we were to make the MIT model available to the rest of the world? We can’t recreate everything but the concepts of MIT and the way that they connect people, their focus and their goals is something that is totally translatable to everybody on the planet and that is all very much at the core of MassChallenge now. We want to be able to say bring us your best ideas to change the world and we will go out and get you whatever you need because we have the people and the resources to make it happen. If we can do this all over the world then maybe we can reorient the global economic mentality away from short-term profit and towards long-term value creation so that we can restore creativity to the soul of the economy were it had been supplanted by greed. So that’s how I got here.
What makes MassChallenge unique as an accelerator?
We are the most startup friendly accelerator on the planet. We don’t take any equity. It’s free for startups. We do that for two reasons, one is that it’s philosophically correct. Startups in my eyes are the saviors of humanity they are the only thing that’s going to save us from this greedy downward spiral. We need new businesses that have big ideas focused on impact not just short-term profit so we want to help them do that and remove friction. The other reason we don’t take equity is that from a competitive positioning standpoint it gives us a significant advantage over other accelerators. Our prices are zero. If you and I thought we had a multibillion-dollar idea why would we want to give away 6% of it? The typcial accelerator model is based on this short-term greed mentality of giving equity in return for support. We realize that the very best of the best startups will never go to those programs but they would come to us because we take nothing, and by aggregating the best startups we can attract the best resources and the best opportunities. That way we get a nice virtuous cycle to kick in which will help to change the economy and humanity in a better way.
The second thing is that we’re really big. We have 128 startups per year in Boston, 90 in the UK and each new program will have somewhere between 50-100. The reason we’re expanding globally as fast as we can is because you can’t impact the world if you’re only doing this in your own backyard. A lot of the best impact opportunities exist in Africa, Latin America, Asia or Europe where there are lots of problems and lots of talent.
The third thing that makes us unique is that we work with startups in all different Industries. A typical accelerator concentrates on software, webby, mobile things because typical accelerators are run by investors, and software, webby, mobile things are low cost and they can be flipped quickly. You get rid of them quickly if they’re bad and you can convert them into profit pretty quickly if they’re good. Whereas life science, clean tech even retail products are longer duration opportunities that require more money. We don’t care about the profit so we are very eager to work with any an all companies that are trying to change humanity – we even work with nonprofits. Which goes back to our main goal which is to catalyze a renaissance globally by empowering startups.
At the moment you have Boston, Israel, UK, Mexico and Switzerland, how long and how far will you continue to expand?
The idea is that we want to bring it everywhere in the world. We made a commitment at the Clinton Global Initiative 2 years ago that we will launch 10 new programs by 2020 and we’re actually ahead of schedule to do that. At that point we’ll have a program on every populated continent.
So you don’t focus on any industry in particular but did you find that there were one or two that were specifically attracted to your model?
I would say what we’re finding is that in each city or country where we operate you tend to develop expertise that reflects that area. So if somebody is applying to the program in Boston they might be more inclined to be in life sciences or education because Boston is uniquely amazing in those industries. So you definitely see little pockets pop up around the world.
Being on the cusp of so many ideas and technologies must be pretty exciting. What do you see on the horizon in terms of what’s next?
There’s a lot of great stuff coming. It’s really hard to predict the trends with a great deal of
accuracy but what we’re seeing is technology extending across industries and into other industries to disrupt. A lot of it is driven by computer science and there’s been a lot of advancements in software and hardware capabilities that are enabling a life science revolution. You’re starting to see digital technology interface with the human body and the ability to collect data about your body and physiology to the point where ultimately it will be embedded and not just a wearable. Honestly, every industry is being revolutionized and nobody should feel safe in the status quo over the next 10 to 20 years. It’s super exciting and we want to be part of defining the philosophy and the goals on that cutting edge such that it remains focused on impact and improving humanity not on short term interaction of profit or control.
What do you look for to determine success in startups that apply to MassChallenge?
First, let me just quickly explain the structure. So it’s a competition framework and then there’s a 3 month accelerator portion in the middle where we concentrate on mentorship and give the finalists office space. At the end of the 3 months there is a final round of judging where about 26 startups are declared winners in each program. In Boston they split a million dollars of cash prizes and it’s 500k pounds in the UK, and a bunch of other in kind benefits like legal services, office space and other good stuff. Last year we had to roughly 2,300 applications from 67 countries and more than 40 US states. Anybody can enter from anywhere in the world with any start up from any industry. We focus on the early stage so less than $500,000 of investment so far and less than a million dollars in annual revenue, most of them have no revenue or no investment.
The criteria that we use for judging is really the marriage of two things; the potential for impact so what would the impact be if they are successful. For example, they’re going to cure cancer, wow, that’s a huge impact. The second is what is their potential to accomplish that. Is it just one guy with no advisers who isn’t even a doctor but just believes that he can do it? So the potential there is basically zero versus maybe a woman that just graduated from Harvard Medical School with an amazing panel of advisors whose science has been validated in journals and then there’s obviously potential. So it’s the product of those two numbers – impact and potential for success.
One pattern I see is that judges, investors and the world favor strong teams. You’re looking for a quality team. The idea is less important than people think because it is almost definitely going to change. Your direction will generally be correct but the implementation, the timeline or the exact customer you’re targeting is almost certainly wrong and that’s going to change as you get into the field and test it. So people don’t care as much about the actual details of the plan as they do about whether the person who wrote the plan is smart enough and committed enough to go through all the trials and tribulations and smart enough to be able to figure out the right answer as they go along. Also, whether they have access to the right people, resources, knowledge etc. So it’s about potential and impact and then a lot of it comes down to how strong the team is, which could be either pedigree or it could be raw talent. They don’t need to have graduated from a top school as long as they know their industry and they’re committed.
What are some things that are important to the long term success of MassChallenge?
One of our early advisors, Desh Deshpande, who is a phenomeninal and amazing individual describes startup life as like driving a car through the desert. There’s only a few gas stations and if you run out of gas, you’re going to probably die so you’ve got to figure out where the next gas station is and make sure you’re going to get there. If you’re too heavy you have to take the doors off the car because you’re only really worried about getting to the next gas station and when you get there you can figure out your next step. So for the long-term success of MassChallenge I’m pretty largely focused on what we need to do right now. So right now we are in scaling mode. We’ve already proven the model and shown that it works in Boston and we know how to make it stand alone and run incredibly effectively. Then we tested in the UK and we had a great first year in the UK with huge satisfaction ratings from startups who were involved. So now we’re doing three new programs at once (Boston, Israel and Switzerland), so it’s always testing and figuring out how we scale it up. I know we’re definitely going to succeed because we refuse to accept not succeeding and we also have strong early indicators that we’re winning. We still need to figure out ways to scale more easily and more consistently and we’re working actively on that right now. Otherwise the model works really well and as long as we don’t screw it up it should continue to work. There’s not a lot of macroeconomic problems or external factors that will determine our success.
Have you had any mentors?
Right around the start of MassChallenge when we were studying the MIT model we learned that startups really badly need mentors and that was really the most important thing that they need. They think it’s money but it’s actually mentorship and advice. So having just determined that, we thought we should get some advisors too. Desh Deshpande is one of my longest standing and most important advisors. Also somebody who was really critically important for designing our process, is a gentleman named Joe Hadzima at MIT, who is an IP Lawyer and a phenomenal person who helped to create the MIT 100K. He knew a lot about how the early stages work and just took a lot of time to help us sort through all our concerns and ideas. Now we have Josh Boger on our board, founder of Vertex and Jeff Swartz, the founder of Timberland. Also, David Goodtree is a guy who has helped us out a lot, as well as Fiona Murray – an expert on international entrepreneurship and a professor at MIT. These are just really good people who are so successful and still love being part of the growth and fresh ideas and they want to contribute to the world and make sure everything is improving.
What are some of the advantages to being in Boston?
I love Boston and I’m a very proud Bostonian. I do think it’s changed a lot and almost entirely for the better. One of the clear and obvious advantages is that it’s a pretty smart place. The population is generally well-educated whether you went to a top university or not it doesn’t matter, I mean even our preschools are top in the nation. The universities attract a lot of R&D money that then turns out ideas and for my business that’s pretty important. I also think Boston has become a more fun place to live and I think we’ve embraced our role as a global hub. We are really honing in on the fact that we are excellent at innovation and idea generation, especially in areas that matter. There’s a difference between eradicating polio and facilitating communication between teenagers. They’re both important but I think Boston is really good at the hard science stuff and the stuff that really has the potential to save humanity. So those are obvious strengths. I think the government is also really enlightened at all levels and we’ve found them to be very honest and motivated by the right desire to improve things. We’ve found the private sector to be very easy to work with and that corporations and individuals are very generous and willing to donate their time to support both MassChallenge and our startups. So overall it’s been very good for us, not just Boston but all of Massachusetts.
How do you unwind?
I live in Newton with my wife and two children. I love traveling. I travel a lot for work and then I travel with my family when I have down time. My son is really into Legos and my daughter is really into everything. I love driving, I’m definitely an aggressive Boston driver. Sorry.
Any advice for potential entrepreneurs or potential MassChallenge applicants?
First off our application deadline is Friday, April 1st at 12pm so they should go to MassChallenge.org/apply and submit their application. Second and more importantly is that launching a new business is incredibly difficult but it’s not obvious up front. It feels like it should be easier if you’ve got a path to it but it’s really hard so don’t do it unless you really believe in your goal. Pick something you care about. It’s not worth launching a startup just to make some money because the probability of making any significant money is actually pretty low. You gotta to do it because you care deeply about the topic, you really want to solve a problem or you’re just fascinated by working in that technology. Then, hopefully, you also make some money but if you don’t love it you’ll never get that far.
In terms of pitching it or planning, one of the things that I picked up that I think is really helpful is to write out the statements of your success. Things like “MassChallenge will be the highest-impact startup accelerator in the world because we have the right team in place, we will be able to raise the money from these targets, the model is superior to other models, etc.” Just spell it out. Then you pitch it to other people and then they may say no you don’t have the right team or won’t raise money from those targets, and they give you ideas about how to make your plan better. Now you have a provable or disprovable hypotheses that you can share with people, it will change but start with the perfect world answer first and then you can validate that with data and feedback from your market. Once you have validated all of the arguments you can say “ok, now we’re doing it” and everybody else will believe it too. So project success but strive for practical momentum all the time by working hard and fixing problems as quickly as you can.