People of the Year 2013 | Joshua Baer

Capital Factory

The entrepreneurial guru next door’s pledge to create solutions for the Austin start-up community.

When the elevator doors open to Capital Factory, the first thing you notice is a distinct hum—the kind that suggests productivity. Furrowed-brow employees march back and forth, iPads in-hand, while small meetings gather at giant picture windows. An industrial space tricked out with modern design and gadgets aplenty, it’s almost like walking into a very hip alien spaceship.

At the center of it all is Joshua Baer, Capital Factory’s founder.

Between creating a 500-person co-working space largely focused on tech startups and quietly investing two million dollars in over 150 companies (including Alamo Drafthouse, Greenling, and Outbox), Baer has become something of an entrepreneur’s guru. In fact, his Twitter profile (which depicts him addressing Barack Obama) reads, “I help people quit their jobs and become entrepreneurs.” That’s probably because Baer has been starting companies since he was a teenager.

Baer’s story reads like a less scandalous version of Mark Zuckerberg’s. In the mid-‘90s, he created a tech startup in his college dorm room (one of the first email hosting companies); his first customer paid him $50/month. By the time he graduated, the company was banking a couple hundred thousand dollars in revenue. “As a college kid, I couldn’t afford to buy any software for my computer, so I applied for all of these beta programs trying to get free software,” Baer says, recalling the olden Internet days when beta wasn’t synonymous with “free,” and email was a hot new commodity. “I applied for this email server not even knowing what it was, and got accepted. Obviously no one else important was applying for it, because I was this college kid with very little to offer.”

With his shiny new $500 piece of software in hand, Baer read the manual, and—presumably because no one else did—quickly became an expert. Soon, he was answering people’s questions online, and got so adept he built an email hosting service for it: one of the first email hosting services. This helped him get recruited by Trilogy Development Group in Austin when he graduated in 1999, and—it being the height of the tech boom—he jumped in with both feet, taking his company, SKYLIST, with him.

At 30, Baer sold this company, but not one to sit on his proverbial laurels, he soon founded Other Inbox, an email filtering and organizing service. This was 2008, and heralded by a big launch at TechCrunch, Other Inbox quickly developed a partnership with Yahoo!. Baer sold it after three years, but on the side, he was already hatching a new vision: a downtown Austin co-working hub, where entrepreneurs and small companies could open up shop and mingle with their kind. Capital Factory opened its doors in 2009.

“Capital Factory is meant to be the entrepreneurial center of gravity in Austin,” Baer says. He’s not kidding: There are 200 companies on Capital Factory’s roster, many of them brand-new. The co-working space also helped create the Capital Factory Mentors, “about 50 of the most successful tech entrepreneurs and executives in Austin,” Baer explains. These include folks like Mellie Price, founder of Front Gate Tickets, and Jonathan Coon, founder of 1-800-Contacts. From becoming a young startup’s first angel investor to sharing industry contacts, it’s a powerful mentorship group—a group Baer aims to double in size by next year.

When asked about Capital Factory’s success stories, Baer shares examples of companies and founders poised to make substantial profits. But, he notes, “many of these people who have financial success see solutions—and problems—in many other areas, too. Now they have the financial independence and resources to let them focus on problems that don’t provide the same kind of financial upside.” He tells me about Dan Graham at BuildASign, who runs a program giving free signs to families welcoming home soldiers from overseas. Guava, another Capital Factory resident, teaches low-income workers financial responsibility and helps them save money with a mobile app, which ties to their bank account and teaches them good financial habits.

For Baer, these kinds of organizations are revolutionary because of the way they approach problems. Their leaders think differently than the rest of us do. That’s because instead of the problem, they become obsessed with the solution. “Entrepreneurs are such awesome, fascinating, interesting people,” Baer says, excitement coloring his voice. “They are, by definition, out there changing the world. And they’re the ones making it work better, and faster, and cheaper.”


Photography by Randal Ford


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