THE DISRUPTORS: Joshua Baer stamps his brand on the DFW startup scene
People have opinions about Joshua Baer, chief executive officer of Capital Factory, whether he is deserving of the judgment or not. Baer is best known for his role within the tech, startup and entrepreneur scene in Austin, TX, where he launched Capital Factory’s first location. Nearly a decade later, the Capital Factory universe has expanded to 2,400 members with a presence in all major Texas cities in the state and a second location that opened earlier this year in the Centrum building in Uptown in partnership with the Dallas Entrepreneur Center. That growth has not come without challenges as Baer has positioned himself as the table shaker, move maker and connection creator.
For all the success of Capital Factory, it’s not unreasonable for someone to question what it means to stake a claim as the “center of gravity for entrepreneurs.” Texans are legendarily skeptical of outside influences. While Austin presents itself as a liberal bastion, Dallas-Fort Worth region is a conservative stronghold whose business and investment leaders present mostly white, male and wealthy. Is Baer driven by a true sentiment of creating wins for all, or someone who enjoys rubbing elbows with influential businessmen and women, political operatives, and corporate bigwigs? Will his agitation for diversity and inclusion truly create results or is this the same conversation without consequences the tech industry has had for years?
To understand Joshua Baer and the influence of Capital Factory, you have to go back to 1999, when he arrived in Austin, fresh out of college, with an invitation to attend the Trilogy Software incubator. Over the next nearly 20 years, Baer would establish relationships, grow and sell businesses and build a state-wide network of entrepreneurs. But it all started in his dorm room at Carnegie Mellon when he inadvertently became a dot-com innovator.
One of the first things that Baer shares is how he didn’t appreciate how fortunate he was for his position of privilege through his New England upbringing. His entrepreneurial role models weren’t big ones, but they showed him that self-employment was possible and achievable.
“I was a middle-class white guy who was told I could do whatever I wanted, even become president,” he said. “I recognize now not everyone had that.”
Baer majored in computer science. He built his first web browser during his freshman year and then turned his attention to e-commerce. With his growing knowledge, he began consulting on programming and SAAS email marketing services. In his sophomore year, a client invited him to host the server from his college modem rather than on the client’s network, and this became his first business, SKYLIST (now known as PostUp).
A short three years later, Baer arrived in Austin during the peak of the dot-com boom and had to make a decision to keep building his business or interview for a full-time role. Ultimately, he decided to work at an incubator hosted by Trilogy Software so he could learn and keep running his business. As his entrepreneurial journey continued, Baer created other business ventures and became an angel investor. He shared that one of his biggest challenges during this period was learning to manage expectations when no one knew what success was.
“There was no media coverage, no lists, only bootstrapping and learning,” Baer said. “I was focused on just getting paid.”
The knowledge he gained as an executive and advisor informed his decision to launch Capital Factory in Austin in 2009. After nearly 10 years in leadership, Baer is able to reflect on his journey as an executive and disruptor.
“As a first time CEO, I was always trying to prepare for the next stage of growth,” he said. “I was unreasonable and expected no mistakes. Now I have a different perspective.”
You don’t have to look very far to find Baer’s outlook. In August 2017, he shared the “Texas Startup Manifesto,” a nearly 3,000-word thinkpiece that called for unity throughout the state’s startup community and the creation of a collaborative environment over one of competition. The Manifesto also served as an announcement that Capital Factory was bringing its platform to Dallas, Houston, and San Antonio, and expanding the accelerator program and mentor network.
Baer is currently working on the Manifesto 2.0 and happily shared that in the year since the original came out, Capital Factory has doubled the number of companies it works with outside of Austin (from 15 percent in 2017 to 30 percent in 2018), hosted 12 bus trips throughout the state last year, and they are hiring for a venture associate in Houston.
The community at the Dallas location, which opened in spring 2018, has been growing slowly but steadily. Programming is available to members and the startup community multiple times per week and several companies that office out of the space are becoming success stories. It remains to be seen if the buzzy atmosphere that characterizes Austin scene will translate to the more staid and risk-averse North Texas community.
Baer is pragmatic about the Dallas location. “[I’m] realizing that every city is different and requires different approaches,” Baer said. “I have to be patient and meet people where they are. Not every city is Austin.”
One of the ways that progress could be hampered is if the issues affecting the larger tech scene – sexual harassment, lack of diversity and inclusion, and security issues related to the management of customer and client information – infect the Dallas environment. Baer spoke on the record regarding the negative impact of the arrest earlier this year of Deep Venture’s Stephen Hays on domestic violence charges. Capital Factory also earned positive press for the first $100K Diversity and Inclusion Challenge is hosted in Dallas.
Regarding tech and issues regarding trust in the age of AI, genetic modification, data breaches and sharing of user data, Baer said “When we talk tech, we talk scale. That’s the magic of tech: you can do small and inexpensive. If it works, it goes global. That’s what tech’s responsibility and when it can impact the world. It’s not just gains, but the scale that comes with responsibility.”
One of the few visible missteps for Capital Factory happened last year when the accelerator asked participating companies to share internship opportunities. When those in tech saw that the majority of the internships were unpaid roles, some expressed concern that unpaid internships perpetuate the system of inequality that elevates those who can afford to work without pay over those who cannot. When asked about the situation, Baer brushed off responses to the potential opportunity for disparities, calling it “ridiculous” and stating that it’s unlikely an intern from any of the startups feels exploited. The reply seems oddly out of place for an organization that champions diversity and inclusion, though Baer did temper his words by expressing hope that the startups in the program would be inspired by Capital Factory, who pays all workers, from interns to part-time workers.
As Capital Factory comes up on its 10 year anniversary as a central point of influence, funding and networking for the startup and entrepreneur community in Austin with plans in action to expand statewide, it feels like Baer and Capital Factory are at a tipping point.
When asked about what success looks like, Baer shared that getting investors who haven’t traditionally invested in tech to directly invest in startups and in the funds that support them counts as a win for him. It will take those investors, alongside the Capital Factory employee groups he is building in Houston, San Antonio, Dallas and Austin, startup founders and entrepreneurs, and corporate partners to ensure that the Texas Startup Manifesto is not just a dream but a reality. And Baer is well on his way to victory.