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Sprint Accelerator: Changing Carrier DNA

KANSAS CITY -- Sprint's new Accelerator in Kansas City, Missouri, is not your typical telco endeavor.

For one thing, the idea for it was formed in March of last year and approved by Sprint Corp. (NYSE: S) higher-ups in May. A partner was secured in August. Ground was broken in October, and it opened its doors on New Year's Eve. That's not telco time. It's startup time, says Kevin McGinnis, VP of Sprint's Pinsight Media+ by day and head of the Accelerator by nights and weekends.

That's exactly the mindset Sprint wants to promote in its new Accelerator. That's also why the lab was opened in downtown Kansas City, away from Sprint's suburban headquarters, in the much hipper Crossroads art district. Light Reading checked out the new digs this week, before the doors officially open in March. Click on the image below to see inside.

Sprint Mobile Health Accelerator
Next month, Sprint will officially open the doors of its 15,000-square-foot facility to the first class of 10 startups chosen to reimagine healthcare.
Next month, Sprint will officially open the doors of its 15,000-square-foot facility to the first class of 10 startups chosen to reimagine healthcare.

Like most of the wireless operators, Sprint has actually had a developer program in place for 12 years and has been working on exposing its application programming interfaces (APIs) for nearly as long. But the Accelerator is Sprint's first large-scale move to put its money where its mouth is. The wireless operator is doing things differently than its larger competitors, too.

McGinnis says that, unlike Verizon Wireless , which treats its Innovation Labs like internal R&D facilities, or AT&T Inc. (NYSE: T), which he says is more open, but on an invite-only basis, Sprint wants to be truly open -- to any startup and any idea, whether enterprise or consumer. (See AT&T Opens New Innovation Labs and Photos: Inside Verizon's Developer Playground.)

Healthcare in focus
The carrier is actually narrowing it down much more than that. The Sprint Accelerator was built in partnership with TechStars, an entrepreneurial organization that provides mentorship and VC funding to startups across the country and in London. It runs its own accelerator programs, as well as partners with companies including Disney, Barclays, Sprint, and others for accelerators with a unique focus, like cloud, connected devices, or education. Its collaboration with Sprint is homing in on healthcare, a vertical in which Kansas City is well entrenched as the home to companies such as Cerner and KU Medical Center.

During the open application period that ended on January 6, startups across the globe pitched their health-care related apps, services, and products. Sprint plans to pick 10 finalists to move to KC for 90 days and execute their visions with the support of Sprint, TechStars, and their many local partners. In return, TechStars gets a six percent stake in their company, and Sprint will offer a convertible note to fund the company.

The goal for Sprint is to bring innovative new services to its healthcare practice, which McGinnis said currently under-indexes, compared to AT&T and Verizon. It also wants to find new partners ultimately or, he admitted, find attractive companies to acquire, seeing that new Sprint owner and SoftBank Corp. CEO Masayoshi Son has a predilection for M&A. (See AT&T Opens Up on Health and Report: SoftBank Preps $19B Bid for T-Mobile.)

"At the Accelerator, if we don't end up doing business with [the startups], Sprint won't be upset," McGinnis said, adding that it's more likely than not that Sprint will work with the startups in some capacity.

Sprint's other hope is to convince these innovative new companies to stay in Kansas City once their 90 days are up, thus building the entrepreneurial community in the city. (However, whether Sprint's headquarters stay in KC is another story entirely -- see Sprint: Heading to California?)

An even loftier goal at which McGinnis is aiming is to change the culture at Sprint by exposing it to risk-taking and operating without a safety net. Indeed, this is the message that Son has pushed on his new employees, even yelling at top-level executives when he's seen things he doesn't like. (See SoftBank's Son Keeps Sprint on Short Leash.)

The carrier certainly does have its hands full in trying to build out its patchwork Spark network, to complete Network Vision, to keep customers from straying, and to weigh a merger with T-Mobile US Inc. Despite these formidable challenges, the Sprint Accelerator is its biggest indication that it's not giving up on innovation in the meantime.

"We want to expand this nationally, but we are focused on natural, organic growth," McGinnis said. "We want to show how you operate as an entrepreneur. We want to change the DNA at Sprint."

— Sarah Reedy, Senior Editor, Light Reading

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mhhf1ve 2/27/2014 | 6:34:43 PM
Imagine the uproar... If AT&T invested in startups like this, there would be an uproar over how wireless net neutrality is dead -- and that AT&T would be able to pick and choose which mobile startups would succeed based on its "sponsored data" programs.

Sprint can get away with this because it doesn't have the same market powers as AT&T.
Sarah Thomas 2/19/2014 | 11:13:18 AM
re: Carrier DNA Good points, wanlord. Once all the networks are more or less comparable, which will happen -- it'll just take more time for Sprint and T-Mobile -- innovative services become so much more important. Pricing and handset selection is too, of course, but that may begin to look alike eventually as well.
wanlord 2/18/2014 | 1:40:01 PM
re: Carrier DNA Your T-Mobile example is a good one. Carriers like VZW like to tout their "network" and while that matters right now, it won't matter forever. Eventually others catch up and while all may have pro's and con's, they all work for what most people are focused on, using apps and texting, etc and they want to do it CHEAP without complicated plans and want freedom. Kids are the heavy users and when they are getting their new devices, they are not going out and researching JD Power Reports, coverage spots, speeds, etc. I think they want what is cool and what their friends have.
Sarah Thomas 2/17/2014 | 8:25:28 PM
re: Carrier DNA Agreed, Brian! And, to be fair to Sprint, the Accelerator hasn't even officially opened its doors yet. It may take time to change the culture at Sprint, especially when they have so many network issues to work through, but you have to start better. Why not help startups and the community in the meantime?
Sarah Thomas 2/17/2014 | 8:23:23 PM
re: Carrier DNA I am biased, because I love KC, but I also think it has the right mix of things going for it to change those rankings -- Google Fiber, Sprint Accelerator, other startup incubators like BetaBlox, the Kaufman Foundation, a growing downtown... And, its huge healthcare base also makes that vertical a smart focus for Sprint's Accelerator.
Sarah Thomas 2/17/2014 | 8:09:55 PM
re: Carrier DNA Seems like a lot of the innovations you mentioned happened on top of the network. Of course, operators are a vital part of the value chain, but they didn't develop the smartphones or OTT apps and services. We've seen innovation in different forms, like T-Mobile's business models, but it's hard to find an example of a really good service an operator built (not acquired) on its own.

I hope that starts to change, too, though. It certainly seems like a priority amongst operators doing progams like this and working on exposing their APIs.
briandnewby 2/17/2014 | 12:41:48 PM
re: Carrier DNA Well, if it doesn't make the top 25, then the only way to move on up the list is to do something like this, right?

In fact, with Google Fiber choosing Kansas City as its first location, I think the innovation story is being written, anyway.

But, I know the cool photos of the place are here and all, but none of that drives innovation.  Innovation comes from smart people who are, at times, risk takers.
wanlord 2/17/2014 | 11:42:09 AM
re: Carrier DNA Do you think KC is a good place to locate an innovation center? KC doesn't even make the top 25 list.

briandnewby 2/16/2014 | 8:00:57 PM
re: Carrier DNA I'm biased, of course, because I worked nearly 20 years for Sprint--but it's been 10 years since then and I (semi-seriously) believe much of their problems snowballed when they changed their colors from red and black to the Nextel yellow and black. 

But, I would challenge that telcos aren't innovative.  At the very least, wireless companies aren't "telcos" in the traditional sense.  And, I know that to a large degree Sprint and others are just the engine behind the products, but smartphones and tablets (and the whole Internet of Things) have been a source of tremendous innovation over those last 10 years.

If you are an innovator in a number of established industries, you want a relationship with Sprint, AT&T, and Verizon.

I think the Accelerator program is great.  I don't buy the "changing the DNA" thing because they, after all, are off-site and will have little influence to make that change within the Sprint campus.   But I do believe this is a great move to attract entrepreneurs and, I bet, a fun place to work. 
Sarah Thomas 2/14/2014 | 4:54:37 PM
Re: The comfy chair? True. No, but there were about 7 different ways to make coffee in the kitchen, which is also vital.
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