Phoenix Rising: How A Tech Startup Oasis Emerged in the Arizona Desert
A growing number of entrepreneurs have started and scaled innovative companies in Phoenix, cultivating a blossoming tech ecosystem in what was once a startup desert.
Military veterans are the newest foot soldiers to join the ranks of entrepreneurs powering Phoenix’s transformation into an unlikely startup oasis. There, in the sun-baked desert urban sprawl, an increasing number of men and women who bravely served our country are braving the entrepreneurial wild, flipping the script on the transition back to civilian life and striking out to launch their own innovative enterprises.
On the frontlines leading the charge is Phil Potter, a former U.S. Air Force biomedical sciences officer-turned serial “vetrepreneur.” In 2015, the longtime Arizona State University assistant dean and research psychologist founded a startup incubator designed specifically for military veteran entrepreneurs. Cleverly called The Armory Incubator, the bustling launchpad for veteran-owned small businesses is anchored out of the Arizona Center in the heart of downtown Phoenix.
“There are a lot of descriptors out there right now around veterans,” Potter told Free Enterprise, “and I think the most common narrative is that they’re broken — that they’re homeless or having a hard time finding and keeping jobs.”
However, he continued, “the truth is, the veterans I know, have served with and have come into contact with, sure, they’re impacted by the experiences they had in the military, but many are also positively contributing to the entrepreneurial fabric of Phoenix, and, together, we’re changing perceptions and outcomes for the better.”
At The Armory, Potter’s goal is to “construct entrepreneurial ecosystems to support the launch and scale of high valuation startups founded by elite military veterans.” Since opening his doors in December 2016 — at a well-attended event kicked off by Phoenix Mayor Greg Stanton, who spearheaded the city’s successful 2013 initiative to end chronic veteran homelessness — Potter has helped more than a dozen veterans springboard and grow their startups.
Through the use of The Armory’s free, open concept co-working space, and via ongoing one-on-one mentorship and broad network and investor access, participating veteran startup founders have a better chance at not only surviving the critical first weeks and years of entrepreneurship, Potter said, but also at thriving over the long haul as well.
“The men and women who have fought wars for our country already have an entrepreneurial survival mindset from that experience,” he says. “We know from data that one in four U.S. veterans is interested in starting a business as opposed to getting a job. The seeds of independent enterprise are already there, but the problem is that only about five percent of veterans are actually doing it.”
He added: “Our program helps to turn that disconnect around and helps these valued citizens make it happen, not just for the short-term, but for the years to come.”
To date, eight veteran-owned business have launched out of The Armory. By the end of this year, Potter hopes to grow the number of cohort graduate startups to 40 or more. Some of the companies to roll out of the niche incubator are: EZ Dump Commercial, maker of a high-tech waste receptacle, Rush Club LLC, a high-energy fitness competition upstart, and CYR3CON/Cyber Reconnaissance, Inc., a specialized cybersecurity firm.
“Right now we have some very talented founders in The Armory, including local software developers, who are very good at what they do,” he said. “Thanks to them, we’re at the point where we are scaling these companies and already adding dozens of jobs to the local economy.”
In The Right Place at The Right Time
“Looking at the lack of military-civilian divide here, plus the sheer access to tech talent coming out of our nearby great public and private universities and colleges,” said Potter, “right now there might not be a better place to start up from as a veteran entrepreneur than Phoenix.”
Potter isn’t just speaking on a hunch. The diverse city of 1.9 million he calls home, Arizona’s most populous urban municipality, continues to rise as a hotbed of homegrown entrepreneurial innovation, ranking among the top 25 rising American tech hubs on the latest Innovation That Matters study, a joint research effort by D.C. startup incubator and venture fund 1776, Free Enterprise, and the U.S. Chamber of Commerce Foundation.
Phoenix, now dotted with just shy of a dozen tech-focused co-working spaces and known for monthly Startup Grind entrepreneurial meetups and the annual PHX Startup Week, also recently ranked No. 10 out of 40 U.S. metropolitan areas on the Kauffman Index of Startup Activity.
Meanwhile, an estimated 514,000 military veterans currently reside in Arizona, according to a Housing Assistance Council report sponsored by J.P. Morgan Chase & Co. Also per the report, approximately 10.5 percent of the state’s adult population have served our country. Of the total number of veteran residents in the state, the report additionally revealed, an estimated 12.4 percent served in the military in conflicts in Iraq and Afghanistan.
From the Battlefield to Business Ownership
Tom Bishop is one of the latter. A lifelong Arizona resident and seasoned self-taught software engineer, he served in the Iraq War after being inspired to enlist following the attacks of September 11th, 2001.
With Potter’s help, the former U.S. Army E-5 sergeant and member of The Armory launched Zendoks Wellness. The innovative digital health platform connects healthcare providers, health coaches and other various health industry professionals to their patients and clients by integrating with iPhone and Android compatible wearable tracking devices and apps, such as Fitbit, iHealth and Garmin.
A recipient of two Purple Hearts, Bishop says he launched (and bootstrapped Zendoks) out of Scottsdale, Ariz., about a 25 minute drive northeast of Phoenix, because he’s watched the area blossom into a tech mecca for nearly two decades, and he’s long wanted to have his own piece of the fast-flourishing entrepreneurial pie.
“I was raised in Phoenix and went to school here, and over the last 20 years now, I’ve seen how Arizona has grown in the tech sector, starting with the big guys moving in,” Bishop, also an advisory board member of Honor House, a Phoenix nonprofit that assists wounded warriors in transitioning back to civilian life through alternative therapies, told Free Enterprise. “Leading corporations and Fortune 500 companies, like Intel and others, have adopted space here and have grown their presence over time, creating amazing opportunities and innovations right in our back yard. It wasn’t long before smaller, local tech firms followed in their footsteps, going for their own.”
Throughout his civilian career, Bishop, who was medically retired from the military due to multiple injuries sustained during combat, has worked for several Greater Phoenix tech startups, hammering out software code in the shadows of large technology corporations hailing from afar.
“I’ve been very aware of where this ecosystem has been evolving to,” said Bishop, “and it’s now kind of exploding, which completely makes sense because all of the resources you need are here now, and you don’t have to dig through obscure or exclusive networking forums online or move thousands of miles away to get the help you need to get off the ground. There’s a strong grassroots entrepreneurial ecosystem that has grown up around us, and veteran business owners and startup founders are now at the table, too.”
Contributing to the area’s active military personnel and retired military population — and overwhelmingly supportive military family community — are several local armed forces bases and other military-related divisions and offices in the Greater Phoenix area. Among them are Luke Air Force Base, a U.S. Defense Department Investigative Services office, as well as Arizona National Guard outposts and a National Guard Armory location, and others.
“In some of the better-known and more legacy tech centers in the U.S., a large civilian-military divide has long persisted,” Potter said. “It can be very difficult for veterans to professionally network in these places, and for startups to integrate into those larger, longer-established business ecosystems, let alone rise to the top of them. Over here in Phoenix, however, we have a very long and distinguished history of acceptance and integration of military veterans, with one of the largest Air Force training bases in the arsenal right on the edge of our metropolitan area, just a 20-minute drive from downtown. We’re built for this.”
Potter continued: “We also enjoy many veteran-friendly employers, a friendly regulatory environment for businesses big and small, and you can still own a small home for a relatively little amount of money. Aerospace and defense are very, very big here as well, going back decades. The service members who pass through Phoenix while serving oftentimes come back when transitioning to civilian life, the ideal climate calling them back. The list goes on for why this urban resort city is so win-win for starting again — and for starting up — as someone transitioning out of the military and into business.”
For Bishop, it was Potter who helped make that pivotal transition much smoother for him.
“Apart from getting back into coding after coming home wounded from the Iraq War and the psychological effect of that contributing to my recovery,” Bishop said, “starting my own business has been the most rewarding, and Phil [Potter] has played a big role in that. Phil is the guy who is not just talking about building pathways to veteran entrepreneurship, he’s doing it.”
“He made a statement when he opened up an office right in the middle of downtown Phoenix. It was a no-brainer to align with him and he’s helped in a capacity that you can’t pay for, beyond just being a mentor and facilitator for a veteran startup incubator. Phil actually cares about you as a veteran, as an entrepreneur, as a human. He’s genuine and he’s a veteran working with other veterans, so there’s a certain underlying connection there. We have that inherent camaraderie, that shared passion for the advancement of Phoenix, and we’ll do whatever it takes to help each other succeed — right here, right now.”