For Rochester, becoming the 'Silicon Valley of Medicine' won't be easy

The Destination Medical Center project wants to give Rochester a reputation for something it's never been: a magnet for tech start-ups and entrepreneurs.

But turning the city into what the DMC calls the "Silicon Valley of Medicine" won't be easy.

The DMC is a multibillion, 20-year economic development effort to remake Rochester so Mayo can better compete for both patients and top talent. It's also meant to help diversify the region's economy by attracting new businesses.

But Rochester's risk-averse culture has held it back, said Jamie Sundsbak, an entrepreneur and former Mayo Clinic researcher.

"When you have a large medical institution like the Mayo Clinic — a world renowned, top medical institution in the world — you get that way by eliminating risk," he said. "If you look at some of the entrepreneurial communities, risk is what they are excited about."

To adapt, Mayo is making some changes.

It has lifted policies that blocked employees from owning or holding an executive position with a medical company. A relatively new business accelerator and a long-standing multimillion-dollar venture capital fund have made it easier for employees to develop new products.

Mayo recently announced Discovery Square, a downtown tech park that will encourage daily collaboration among Mayo employees, start-ups and major medical firms, said Jim Rogers, Mayo's chair of business development.

That collaboration has been missing, he said.

"Gone are the days where a company comes, wants to talk to a few physicians, thinks they have a good idea and they run off and develop a product that doesn't meet the patient need," Rogers said. "Gone are the days we think we can just do it ourselves. It needs to be partnership."

Rogers said these changes signal that Mayo, which is best known for clinical care, plans to expand its focus to entrepreneurship and innovation — something other major medical and academic institutions have been doing for years.

Sundsbak applauds Mayo's commitment to Discovery Square, and he said he sees promise in a $1 million angel investor fund spearheaded by the Rochester Area Economic Development organization.

A new facility called Collider, which Sundsbak manages, rents desks and conference space to small start-ups. The space has emerged as a center for promoting entrepreneurship in the city.

However, to become a tech hub, "buildings alone don't get you there," said Michael Gorman, managing director with the Eden Prairie-based venture capital firm Split Rock Partners.

Mayo's ambition to make Rochester a magnet for innovation has great potential because of Mayo's talent and reputation, he said.

But those are just two ingredients in a complicated recipe that have put other tech centers like Boulder, Colo., Palo Alto, Calif., and even Kansas City, Mo., on the map, Gorman said.

A robust workforce is also critical.

"One of the questions any entrepreneur let alone an investor asks is, 'Is this company located in a spot where we are actually able to scale and grow the business?'" Gorman said.

As Rochester expands, Gorman said it will face the same competitive pressures as other metro areas trying to attract tech-savvy individuals.

And the city already has a shortage of skilled workers that's causing problems now.

That's already been a hurdle for Mike Rolih, who founded and runs GoRout, a company whose technology allows football coaches to communicate with players from the sidelines during practice. The 3-year-old firm is partly the product of Mayo's business accelerator and local seed funding.

Rolih said he's ready to ramp up sales dramatically this year, but he needs more staff to do so — and finding them is proving difficult. He's worried his backers will pressure him to move the business as many investors have done with other firms.

But if GoRout can stay local and becomes a home run, it could radically alter the Rochester's fortunes. Gorman said the city needs only one or two success stories to make it the magnet for innovators that it wants to be.