Jeff Heegaard on the next economy

Photo by Bill Kelley

Jeff Heegaard sat down with The Line to discuss entrepreneurship in the Twin Cities.

Jeff Heegaard admits that his first job, at General Mills, wasn’t a good fit. After leaving what he calls “the corporate castle,” he launched a career of small-business startups and philanthropic activities, building a reputation as one of the Twin Cities’ boldest and most forward-thinking businessmen. In 2010 he joined cofounders Don Ball and Kyle Coolbroth as a partner in CoCo, the metro’s second coworking space. The Line sat down with him in CoCo’s Saint Paul digs in Lowertown to talk about what the CoCo experience has taught him about where we are and where we may be going.

The Line: Jeff, what’s happening at CoCo these days?

Jeff Heegaard: I think the bigger question is, what’s happening to create the need, the desire, for something like CoCo? There’s an emerging entrepreneurial class that has probably always been there but has been under-connected, and having a space where they can connect has created sparks that were unanticipated.

The Line: What are some of those sparks?

Jeff Heegaard: I think to answer that you have to move your focus upward to the greater economy. I mean, we are in a huge shift. There’s an emerging economy — I call it the Next Economy — that’s very different from the one I grew up in. The rules haven’t completely changed, but people are making different kinds of choices voluntarily, and they’re also being compelled to make different choices, different kinds of life decisions. And both are happening in this crossroads called CoCo. It’s a place where very cool people are colliding, and something’s happening because of it.

An Army of Entrepreneurs
I hear people call this the New Economy and say that it’s all about service industries. I don’t get that; if we become just a service-sector economy, what happens to all the people who are left behind? What do we do, park them in a corner somewhere? We’ve got to employ people, lots of people.

I want to see an army of entrepreneurs produced in the next twenty years. And not just tech entrepreneurs. It might be somebody with a hot dog stand. It could be everybody from a hot-dog stand  operator to somebody who wants to do the next Google.

This Next Economy, if it’s going to work at all, has got to take advantage of all of this technology that’s emerging. That hot-dog stand has to be the most efficient hot dog stand possible. We have to figure out a way to make that stand exceptionally efficient, and use all these tech tools to do it.

In many ways I think we need to become like new immigrants in our own country. New immigrants will try anything, do anything, to get established and support their families. They have a can-do spirit, and I think all of us need more of that. We can do it; we’re blessed with great resources everywhere, and we can do it—as much as we complain about all of the things that are going wrong, we really can be a piece of the solution as the next economy grows–locally, regionally, nationally, and globally.

Greater MSP: Pros and Cons
The Line: Especially since the economic meltdown of 2008, there’s a lot of gloom and fear about decline.

Jeff Heegaard: Sure — you listen to these oddball AM stations, and if that’s what you want to hear, that’s what you get. But where does that take us? I guess I cling to this belief that here in Minnesota we have all the resources that it takes to be incredibly successful. We’re a place of great abundance. We can’t seem to agree on what’s important, but we’re a place of great abundance.

I went to the Greater MSP event and was pleased — I was pleased to see my generation of super-CEOs step forward with a recognition that not everybody lives inside the corporate castle. There are people on the outside who live in whole different frames of reference. And Greater MSP seems to suggest that people in these two realms, inside and outside the corporate frame, better educate each other and employ each other.

But if you look at the six major objectives laid out in Greater MSP, none of them clearly articulates this need for an entrepreneurial army, a massive amount of start-up activity. Now, I don’t think government can do that, but it can help create some of the conditions for it to happen. I look at Greater MSP and get excited because it is talking about all the things I care about. But when I look at it through another lens, I think, wait a minute; they’re talking about bringing jobs in from somewhere else — and I think we’ve got to do things ourselves, make jobs here, not take them from other states.

Money Troubles and Opportunities
The Line: Of course, many of the economic obstacles we hear about are quite real, aren’t they?

Jeff Heegaard: The capital markets are focused on short-term returns and on these big massive corporations. We have super-banks, and we’ve seen what’s happened with them. And the capital is not flowing and it hasn’t flowed for quite a while. So what does the typical person do? Hunker down, try to save. Now we get less than one percent on a CD! But there are new ways of raising capital. Things like Kickstarter — I look at it and think, this is incredible! And I don’t even understand how it’s legal!

Right now, say you’re a 22-year-old with a great idea. How do you fund it? You go to your mom and dad, your uncles and cousins. But a lot of that equity has disappeared. And we’re naturally cautious about the future. We’ve convinced ourselves that we’re in a world of scarcity and forgotten that there’s great abundance around us.

In Search of Microinvestors
I think one of the only ways out of this is for everybody to understand that they are part of this Next Economy — to grasp that, instead of saying, “I can’t invest; I only have a thousand dollars.” There might be five companies here at CoCo who, if they had ten thousand dollars, would be able to get past phase one and have a discussion about phase two.

You go to a banker now, and unless you have money, you’re not going to get any money. A good history of employment and a good job won’t do it. You have to have most of the money you want in order to borrow that amount! And that just dampens risk-taking and increases fear. We need people who have some money to go out, seek opportunities, see themselves as micro-investors — as entrepreneurs themselves. And not just to do good, but because they actually might get more than one percent on their money!

We have to figure out ways to do a whole lot of things better — better food, cleaner energy, and so on. We know what we are eating, and we know it isn’t good for us, but we have a hard time deciding to eat differently. We know that this petro-economy is going to kill us, but we can’t seem to migrate from it quickly enough. And the bigger these economic machines get, the more trouble we’re in. That doesn’t mean I’m anti-corporate; we need these guys, but at the same time we need to build the Next Economy in a way that’s defined by better rules, values, and systems.

Beyond One-Dimensionality
The Line: How does CoCo fit into that search for better rules, values, and systems?

Jeff Heegaard: What intrigues me about CoCo is that we have really smart people here, and most of them aren’t one-dimensional. Some of them are building a company, and at the same time choosing a nonprofit to associate with. We have the Citizens’ League here in CoCo now; they moved in last week; they are connecting with entrepreneurs. There’s a cool biotech company that’s working on replacing red dye 40.  There are small companies helping big legacy companies over the hump so they can be efficient in the new economy. Focus to Grow is one company I love — they’re dealing with the issue of child soldiers. A little marketing-consulting company of five or six people and they’re doing that; it blows me away.

Photo by Bill Kelley

The Line: Coworking originally developed in Europe mainly as a platform for social entrepreneurship, but that is not the model here — we’re much more focused on products and services, yet the social-entrepreneurial element shows up.

Jeff Heegaard: Yes, And it’s not like CoCo is demanding that of anybody; it just seems to occur.

I see small companies, two and three people, begun to associate with other twos and threes, and occasionally I hear “maybe we should push these two together and become six.” One of those mergers — they’re not easy — happened just this week. There’s a lot of this going on, but it’s still at a micro-scale. We have a couple hundred members here, but what if we created a system where there was a whole lot of startups going on?

The Line: It seems like these young entrepreneurs are willing to try things — and willing to fail. 

Jeff Heegaard: It’s not that people here are willing to fail — quite the opposite. Not a single one is willing to fail! In many cases, their families are depending on them to succeed, just like the situation with new immigrants and the drive and vitality they bring. But they do seem willing to go down different avenues and try different things. It probably has a lot to do with these devices that sit on the tables — these Macs.

I don’t know how a state goes about creating an army of entrepreneurs like these, but I know it would be a very cool thing. And when I see the people who come in here, full of energy, their eyes bright, I get very optimistic. I see little green shoots coming up here, and I get a feeling of spring, of optimism about the Next Economy.

This article is reprinted in partnership with The Line, an online chronicle of Twin Cities creativity in entrepreneurship, culture, retail, placemaking, the arts, and other elements of the new creative economy. Jon Spayde is the managing editor of The Line.