March last year, not long after Trump declared a national emergency, Massachusetts announced a state-wide lockdown. Cambridge Innovation Center (CIC), one of the leading co-working spaces for startups, went from a profitable business with 2,000 startups hosted under its roof to the edge of bankruptcy.
Founded in 1999, CIC has been operating the co-working space across nine cities globally before co-working was even a thing. Besides the traditional co-working space, it’s also affiliated with Lab Central, one of the world’s largest shared wet laboratories), and Mass Robotics, a hub for IoT and automation industries. When COVID-19 hit its headquarter in Boston, CIC was running a profitable business with more than 350 employees.
Then we all know what happened. Overnight, all the real-estate related business, such as Airbnb and WeWork, all faced an unprecedented crisis. Many of them barely survived; a lot of them went out of business; CIC, on the other hand, went from almost going-under to recovering its loss in three months. Unlike Airbnb, which waited till the market turned around, CIC started a whole new business arm, CIC Health, which transformed into a profitable business within a few months and saved the company from closing its door.
I had an opportunity to speak with Tim Rowe, Founder & CEO of CIC, to hear his first-hand story of this fascinating turnaround case during the pandemic.
I just came back from CIC Health. The old co-working space is now converted into a COVID test site. Could you tell us about this new venture you accelerated in only a few months?
Tim: CIC Health is a healthcare logistics company, currently providing covid testing services for individuals, schools, and large organizations. The company was started in August last year. In only three months, we have completed over 600,000 tests (priced between $50-80). Working with the state department, we are going to start the vaccination operations soon (note: In January 2021, CIC Health started vaccination sites in Massachusetts)
From operating co-working space to running COVID testing sites, this seems to be a crazy jump from your core business. How did you arrive at this idea to take such a risk at this particularly uncertain time?
Tim: From what we have achieved so far, it seems like a no-brainer, but it was never a linear process. In the beginning, we were just thinking about how we can keep our space safe for the companies to return. In addition to masks and disinfection, frequent testing became an obvious necessity to us. However, the testing cost was so high ($150/test on average) that no company could afford such luxury. That’s when we started looking into this testing operation.
Like many other healthcare businesses, a testing operation is not just about a testing machine and a medical professional. There is so much going into it. You need regulatory approvals, liability insurance, testing site, billing system, support staff. In a fragmented industry like healthcare, this is a large operation puzzle for any provider to solve. From what we saw, every part of the testing process was readily available. It only requires a strong operator to ensure everything runs efficiently and effectively. That’s where we come in.
The core of the co-working space business is about operations and management. We bring in our expertise to quickly assemble every loose part. We were able to break down the complicated process and efficiently assign necessary resources and people. We did it very successfully with CIC. We are doing it again to build CIC Health. One of the biggest costs for a new business is communication, whether in time or dollar spent. For such a time-sensitive operation, we couldn’t afford to waste time in meaningless negotiations. We maintained complete transparency with our partners, plus our reputation allowed us to facilitate efficient conversations among all.
A few months ago, CIC Health didn’t even exist. It not only now processes a high volume of testing but also is starting to run Massachusetts’ mass vaccination sites. How did CIC Health’s success impact CIC’s overall business?
Tim: We are, as part of the community, doing whatever we can to help fight the pandemic. We love what we do and firmly believe in our mission and the value we are bringing in during this unprecedented time. Meanwhile, the revenue generated from CIC Health helped CIC to keep our employees. Being in the industry seriously impacted by COVID, we, unfortunately, needed to let go of 12 employees (with eight out of 12 were moved to CIC Health). However, we were able to keep the majority of our employees thanks to CIC Health. When the whole thing started, there was a long period I wasn’t sure if CIC could survive this. We were fortunate to find another opportunity to put our strong team to use and support a meaningful cause. It is equally vital that we protect our employees and their families. I am happy we were able to accomplish this.
That was impressive to have kept the majority of your employees. Back to CIC Health, this sounds almost like a corporate innovation case on steroids. Most of the new business ideas incubated within corporations died. Any lesson learned you’d like to share with others?
Tim: I share what we’ve learned in this article published by Harvard Business Review, but I will add two more things here:
- Externally: Recruit industry veterans to acquire domain knowledge and connections. We were never in the healthcare business, so it was essential for us to hire someone senior to run the business. Not only to stop us from making expensive mistakes but also to acquire crucial business relationships we would not have had in the first place.
- Internally: A strong team with unbreakable trust. You don’t want your old team to run a new business it knows nothing about. At the same time, you do want your old team to run the part that the team can perform their best. In the case of CIC Health, we acquired domain knowledge from outside experts. However, when it comes to operations, which is our bread and butter in CIC’s core business, our team can come in to do the heavy lifting. We migrated a big part of the CIC team to CIC Health to get things started. Unlike most early startups, a corporate team has the high trust in place from the get-go. You can not just create this from day one even though you hire all top 1% talents into your team. High trust reduces communication costs and increases efficiency. We would have never pulled this through in a matter of few months if we were not to have a tight team with high trust in the first place.
For corporate innovation, it is crucial to understand your company’s strengths and weaknesses. We know our team is a strong asset, and we make sure it performs 110%. We find the right people and resources to complement the rest we are lacking. That’s how we built a business in three months.
Tim Rowe is the founder and CEO of Cambridge Innovation Center (CIC), a builder and operator of innovation communities, and CIC Health, which operates a national-scale online marketplace for Covid-19 testing. He also is the chair of the Venture Café Global Institute; co-founder of LabCentral, one of the world’s largest shared wet laboratories; and chair of MassRobotics, a hub for the sensing, internet of things, and automation industries.