PALM SPRINGS — When Andy Gibbs began pitching Duty 1, the Vietnam-era veteran was branded a dreamer.
But the founder of Veterans Business Institute was given a cubicle in the Rabobank Regional Business Center — one of many old city jail cells the Coachella Valley Economic Partnership and Coachella Valley iHub retrofitted for budding entrepreneurs — and went to work.
That effort is paying off. In mid-January, Microsoft sent over a film crew to tell the story of Gibbs and the intellectual property business model he created, Duty1.com, to manage a network of veteran-owned businesses across the nation by 2014.
His story — one of three Microsoft picked for a small business marketing campaign — is among several startups with potential who have used the new iHub.
Others include Tala Enterprise; Seismic Warning Systems; Mobile Farming Systems; Attune RTD; Electronic Vehicle Enterprises; Divvali LED Lighting; and Design USA.
“There is finally a facility with grow-your-own economic development that has a chance to flourish,” said Rick Daniels, the city manager of Desert Hot Springs, one of three cities that helped create the iHub.
“It’s refreshing when you see theory — and the way it’s supposed to work — come to life,” the former CEO and president of CVEP said.
Tala Enterprise, a clothing manufacturer that on Jan. 3 moved into a warehouse in the Coachella Valley Enterprise Zone, has already drawn recognition.
The former maker of a Kentucky Denim clothing line that was produced in China, Liat Tala opened the new Tala Enterprise warehouse in Thousand Palms Business Park with a startup crew of 31 and two primary goals:
• Employ 400 people by the fifth year of operation.
• Establish a fashion district in the valley.
Earlier this month, Tala traveled to Washington, D.C., to address a forum on problems facing American manufacturers. She then visited Sacramento to take part in a panel to discuss ways to make California more business friendly.
Rep. Mary Bono Mack, the Palm Springs Republican who chairs the House Subcommittee on Commerce, Manufacturing and Trade, said “Liat Tala is the perfect example of entrepreneurialism. … She is a great example — on a small scale — of what we need to do across America.”
Create wealth
Coachella Valley iHub chief executive Joe Wallace — an Indiana entrepreneur, consultant and venture capitalist — started his new job in the valley on Jan. 9.
With his experience at a Midwest incubator, he has no intention of incubating “snow-cone stands.”
“My theme is, ‘Let’s do things to create some wealth,’” he said. “Where wealth happens, economic prosperity happens.”
The iHub — designed to cover Palm Springs, Desert Hot Springs and Cathedral City — offers support, education, training, networking, financial assistance and various services and incentives to startup ventures.
While CVEP’s focus is broad, the iHub focuses on cultivating business along the lines of clean technology, solar energy, wind power, geothermal and smart grids. It also focuses on biofuels, water filtration and conservation technologies.
Wallace said he has eight iHub applications in hand, and four are pending. Two businesses want actual space, and 10 plan to incubate in the virtual world. Several applications hail from the iHub cities and one is from out of the country.
Not all business-concepts get into the incubation phase, as applicants are vetted before they get a virtual or real iHub door key.
“The best applicants are ones in technologies that are not being done by anyone else, and are enabling technologies for existing renewable energy,” Wallace said.
“Take these windmills, for example. We’ve got (thousands) of them on the north end of town. We’ve got solar panels all over the place. If you have storage solutions, they would be much more efficient, much more valuable.
“You can burn a lot of time and energy making one windmill work. It would be great if we could make a whole field work better.”
The entrepreneurial stories that bubble up show the Rabobank Regional Business Center is gaining momentum, Bono Mack said.
“If CVEP is identifying local entrepreneurs and private investment — and, most importantly, great ideas — it behooves us all to work together as a team,” she said.
That spirit of cooperation helped the iHub land the first Divvali LED Lighting and Design office in the U.S., said Lisa Olson, general manager of sales and marketing for the Montreal-based firm. She checked out spots in Chicago, Boca Raton, Fla., San Diego, Las Vegas and Houston.
“When I took the tour, everyone was so helpful and positive, and entrepreneurial in their thinking,” she said, noting the receptionist installed a Divvali LED bulb at her desk immediately.
Minutes later, the CVEP team discussed putting a poster in the hallway to explain how much electricity one LED bulb would save.
“It’s that kind of warmth and cooperation that gets things done,” Olson said.
“Even something simple and small like that goes a long way.”
Opening doors
“This is a methodology that has been used successfully in other communities,” longtime inland economist John Husing said.
“It generally involves giving entrepreneurs a first-class place to do their work to get started, generally with the support they can’t get working out of a garage.”
Not everyone makes it.
Linda Knopp, director of policy analysis and research for the National Business Incubation Association in Ohio, said the average time it takes for a business to graduate from an iHub is three years.
“Depending on the type of company, some can be even longer,” she said, like biotech and life science industries. After graduating from an iHub, surveys endorsed by her group say 87 percent of the new ventures survive at least five years.
“Innovation hubs have a good track record of helping companies be successful,” she said.
“The big part is, they help the entrepreneurs in the early stages of developing a business when the businesses are most vulnerable to failure,” Knopp said.
“They identify their challenges, weaknesses and connect them to expertise these firms need to grow to the next level.”
Statistics on success by ventures working outside of iHubs vary, but Knopp said the NBIA most often cites U.S. Small Business Administration figures. Seven out of 10 new employer firms will survive at least two years.
Top marks
Husing, who gives grades during the annual “State of the Economy” report he provides CVEP, said the progress a handful of iHub businesses has already made is telling.
“I’d give it an A, for sure,” he said of the iHub.
“What we’ve done, so far, has raised our profile and credibility,” said Tom Davis, vice chairman of CVEP’s board of directors. “I think everyone that’s visited the center is aware of it, and extremely impressed with it. It’s a matter now of getting people to the door.”
Recently, investor Hershy Spitz toured a white, self-contained trailer that Richard O’Connor, CEO of Mobile Farming Systems, and his team plan to outfit with a hydroponic grow system to produce kosher vegetables, herbs and fruit.
Spitz is considering shipping the 32-foot-long mobile trailers to New York City to supply kosher food for its large Jewish population.
“I live in Palm Springs, but spend 10 months a year in Brooklyn,” Spitz said, as he stepped into the trailer outside the Rabobank center.
“There could be quite a market there.”
“Considering our start from scratch, I think we’ve made tremendous progress,” said Cathy Van Horn, economic development administrator for the city of Palm Springs.
“We already have one or two businesses that are ready to grow into larger space, and start production to build business, and create jobs.
“That’s the prize: jobs.”