What Will It Take to Spur Tech Innovation in The Garden State?

We don’t have to wait for a tech ecosystem to develop in New Jersey, we have one now. – Ari Rabban

As different as David Sorin and Ari Rabban’s careers have been, it’s a shared passion for technology that drives them to a singular goal: A culture that encourages startups and entrepreneurs to call New Jersey home.

Rabban is the CEO of Phone.com, Inc. Previously, Rabban served as vice president of corporate development and marketing for VocalTec Communications, the VoIP market pioneer and developer of the first Internet phone.

Sorin is the managing partner of McCarter English’s East Brunswick office and the head of the Venture Capital and Emerging Growth Companies practice.

Rabban and Sorin are both passionate about creating the ideal technology startup environment in New Jersey. We sat down with the two tech startup enthusiasts to discuss the future of startups in the Garden State.

We talked about New Jersey’s unique opportunity to take a lead role in today’s tech startup world. Plus, grassroots entrepreneurism, a startup’s true number one priority and the biggest asset of a new tech company.

Here are Ari Rabban and David Sorin:

What is your advice for new startups?

Rabban: For a founder: You have to find the right partner. Don’t give up, but don’t try to break a brick wall. And it’s ok to change course. Listen to your gut, but be 100 percent committed.

Sorin: In order to have a business, your idea and your solution have to solve a real problem in the marketplace — either it drives revenue, reduces costs, improves productivity, increases the bottom line for your customers or your clients. And if you can do it cost efficiently, then you have a business.

Rabban: For a young business: Don’t spend all your money, and get money when you can, not just when you need it. If you can generate revenue, do it.  

Sorin: Then you have to think about whether or not seeking outside financing is realistic, your choice of entity (corporation or LLC), how to protect your intellectual property, and what kind of financing strategy makes sense for your business.

How Would You Advise a Startup in the Growth and Development Phase?

Rabban: As you grow from just the core team to new employees, and certainly as you grow above 10-20 people, your strategy should become about the management. The management of people. That is your biggest asset in tech startups. Not a store and not the product you sell. More than your customers. Everything depends on development; if you have motivated, happy, talented employees you will be able to work together and produce good products, fix problems, innovate and grow. Customers will feel it and frankly happy employees will ensure customers are happy – not necessarily true in the reverse. Customers are number two; your people are number one. Only then comes your investors, if you have any.

Sorin: Know and understand your customers, and listen to your target market to best understand what their needs are so that you are meeting them. Because the best way to build a business is by ensuring that what you are developing meets the needs of your clients, customers and prospects. That’s absolutely critical. All along the way you have to be mindful about what your strategies are to protect and preserve your intellectual property. You have to be mindful of your financing strategy. This is really critical from the earliest days through the times when you’re trying to go from an early stage into commercialization.

How Would You Describe the Current State of Tech Startups in New Jersey?

Rabban: We’re not yet top tier, but we’re working our way up. We don’t have to wait for a tech ecosystem to develop in New Jersey, we have one now. The grassroots effort has really changed things for the tech community in New Jersey, and you can’t help but be enthusiastic when you see things happening.

Sorin: There are a lot of people who believe that entrepreneurial activity and innovation is somehow new to New Jersey. But the reality is we have this incredibly rich history and culture of innovation that has always been here. New Jersey was the home of Edison. We’ve had a technological economy and an innovation economy for generations. Whether it’s software information technology, healthcare IT, or telecom, New Jersey is one of the leaders in the country in innovation. It has been, and I believe is currently, and will be for hopefully more than the foreseeable future.

Rabban: Entrepreneurs are doing things differently than they were five years ago. One example is the NJ Tech Meetup happening in Hoboken. This is part of that grassroots effort that is taking place in New Jersey. Grassroots activity or bottom up approach is, I believe, very important to get more of an entrepreneurial spirit going. When individuals interact, network and listen to successful entrepreneurs, share stories etc., it gets infectious and leads to more opportunities and new entrepreneurs

Sorin: 2015 was a very important year in the creation of new, simpler security. We saw a dramatic change in the regulatory scheme, with the advent of crowdfunding in a meaningful way, so those are important elements in making sure we have an environment that is hospitable to growing our tech sector. And all of these Meetups play such an important role, such as industry organizations like NJ Tech Council.

How Can We Foster a Successful Startup Culture in New Jersey?

Rabban: We have to work from the bottom up and really focus on grassroots efforts. We need more entrepreneurs to just start businesses. It’s easier to start a business than ever before. For a tech business, you just need a laptop and a great idea.

Sorin: Never has there been a better time to be an innovator or entrepreneur than right now. There has been a lot of capital available to companies. There are resources available today so companies don’t have to reinvent the wheel, and as a result, less capital is necessary to get new products and solutions to market.

Sorin: It’s the government’s responsibility to make sure we continue to have a highly educated workforce, and a workforce that has the tools and education to meet the challenges of this new economy, and this truly tech-driven economy. A government can provide the incentives through the tax code and through other government programs to encourage and motivate entrepreneurial activity.

Rabban: Universities can help, and the state can continue to create more tax incentives, but ultimately we need more entrepreneurs. We need entrepreneurs who can build cool startups that will draw the attention of venture capitalists who will then open offices near those innovators.

Sorin: Our education system is a critical part of this. So much technology emanates from university labs and business, law, and medical schools. As larger companies become more productive and need fewer employees, there’s this sort of trickle down of very talented people who might have otherwise worked for organizations like that, find themselves displaced, they are using their own entrepreneurial inclinations to come up with other creative ideas. We have to remain a state that constantly finds ways to make it more receptive and welcoming of entrepreneurial activity.

On what makes NJ a great potential for startups

Rabban: Location, infrastructure, academia, big business, proximity to New York City and to Europe, and a little bit of history. Our proximity to New York City is a plus simply because it is New York City. Media, marketing, investors, bankers, academia, talent, events, networking, it’s all close by. It’s a large tech community and we don’t need to compete with New York City. We can embrace it, be an extension of it. As for Europe, it’s much easier to do business with Europe from the East Coast than from Silicon Valley. Many European startups want to come to the United States, and they should come to New Jersey. Our infrastructure supports innovation: the airports and other transportation, our universities and our knowledge base, the commercial broadband and data centers.

Sorin: New Jersey is uniquely situated. We have a quality of life that people like. We have an excellent educational system. We have cultural opportunities, athletic opportunities. We have the Shore and we have mountains. New Jersey is sort of the geographical center of the largest concentration of population and wealth and technology probably anywhere in the country. If you look at Boston to Northern Virginia, we’re the center of that. All of that benefits us.

Where does Bell Works fit into this?

Rabban: The ecosystem. Perhaps an abused phrase, but when you have a place like Bell that is so self-contained with startups, incubators, shared offices, larger companies, events on top of events, lawyers and accountants and other supporting staff, creative marketing and design firms, with restaurants, bars and cafes, something awesome is bound to happen! These coworking spaces are perfect for startups.

Sorin: Companies need far less space than they ever did before. They need more flexibility in their space to grow and shrink depending upon what kind of manpower they need during a particular time in development. So you see the advent of WeWork or collaborative or shared working space, like at Bell Works. Bell Works represents this opportunity to create a very vibrant center of commerce for technology and entrepreneurial activity. With everything going on in the region and the number of people who are supportive of Bell Works, when it achieves its promise, it’s going to be a game-changer, not only in New Jersey, but super regionally.  When all of these tech companies and entrepreneurs are housed in one gigantic building, and we actually can create a center that technologist and entrepreneurs want to be a part of, we will once again have that playground to spur innovation.

During his tenure at VocalTec, Ari Rabban served as president of two subsidiaries that were ultimately spun out: Surf & Call Solutions, one of the initial voice-enhanced e-commerce solutions companies, and Truly Global Inc., a web-based communications service. Rabban joined VocalTec from Lucent Technologies, working at the Bell Labs building in Holmdel. Frequently cited as a VoIP market expert, Rabban has been involved with the Internet telephony industry from its very early days.

David Sorin started SorinRand in 2009, focusing on tech and tech-enabled startups. After growing rapidly, the firm merged with McCarter English to become one of the largest firms in New Jersey and one of the top 150 law firms in the country, with a footprint from Boston to Northern Virginia. He focuses his practice on privately and publicly-owned startup, early stage, emerging growth, and middle market technology, tech-enabled and life science enterprises, as well as the investors, executives, and boards of directors who support and lead them.