The Role of Starbucks in Innovation

By Roger Voyer

I have been drinking a lot of coffee lately. When I call a high-tech start-up headquartered in a basement somewhere in Ottawa’s west end, I invariably get asked to meet at Starbucks at the Pinecrest Mall, which is conveniently located about half way between the west end high-tech community and the downtown venture capitalists, brokers, lawyers and other supporting players.

The first time this happened, the meeting was called for 10 a.m. Why not earlier? I like early meetings. I was told that Starbucks is co-located with Chapters, which only opens at 10 a.m., and that we could use the Chapters’ facilities for our meeting, if need be. I did not know the person I was to meet but I felt that we would recognize each other easily because there would certainly not be many people at Starbucks at that time of day. Wrong!

When I arrived there must have been about 100 people milling around. When I finally found the person I was to meet, after several false starts, I asked him if it was always this busy. He said that the Pinecrest Starbucks is one of the favourite meeting places of the high-tech community and pointed out a number of meetings going on around us. A basement is not the place to meet potential investors, customers or anyone else.

There must be a lot of such meetings going on in various cafés and restaurants in the region because the latest Doyletech Corp. survey of Ottawa high-tech firms indicated the formation some 400 new firms in the region since the high-tech bubble burst last year. These firms are being set up mainly by people using their severances from the larger firms such as Nortel and JDS. Austrian economist Joseph Schumpeter, in his study of the innovation process, has called this process of a phoenix rising from the ashes ‘creative destruction’. The downsizing of the larger firms can be seen as ‘destructive’ but it certainly launched an explosion of creative activity in Ottawa’s west end.

Informal networking structures are important to the innovation process and high technology in particular thrives on networking. In the early days of Silicon Valley, for example, Walker’s Wagon Wheel Bar and Grill in Mountain View was a hub of activity where ventures were discussed and technical problems solved. More recently it was the Il Forniao Restaurant in Palo Alto. There is also the Boar’s Head in Austin and the Space Bar in New York.

The need for people to meet runs counter to the argument that the Internet has killed geography (i.e.: transactions need only be made in cyberspace). It seems to be the other way around; the more there are transactions in cyberspace, the more people want to meet face-to-face.

In the last 15 years I have studied the dynamics of high-tech industries in nearly one hundred municipalities around the world and identified eight key characteristics of success in local level high-tech industrial clustering. The presence of information networks facilitating face-to-face meetings is one of these characteristics.

So the next time that you are in Starbucks drinking an overpriced coffee you might reflect on the fact that you could be supporting the development of high-tech firms in your community. Look around; you might spot some deal-making going on – the innovation process in action.

Roger Voyer is a senior associate with the Impact Group and adjunct professor in the University of Ottawa’s School of Management.