Regional Report: Arizona’s Innovation Ecosystem
How 3 startup companies scaled in Greater Phoenix
Greater Phoenix has emerged as a burgeoning startup market with an environment that enables companies to test, deploy and scale new ideas. Called the “next tech hub” by Inc. at a time in which the New York Times wrote that Tempe’s tech industry is fueling commercial office real estate, the region fosters high-growth and successful launches from entrepreneurs.
Proactive, market-oriented legislation, programs that support startups, and a deep talent base reinforced by universities and other higher education institutions in the region define the success of Greater Phoenix companies. Three local startup leaders joined GPEC’s latest Regional Report to discuss the growth of tech in Greater Phoenix.
- Ellie Casson, Head of City Policy and Government Affairs, Waymo
- Marc Jacofsky, Chief Scientific Officer, The CORE Institute
- Chris Ronzio, Founder and CEO, Trainual
- Moderator: Mark Paratore, Vice President, Business Development, Greater Phoenix Economic Council
“Greater Phoenix is an emerging hub of innovation and activity with a robust ecosystem of technology companies, innovators and founders,” Paratore said. “We certainly are paving the way for tech innovation across many sectors, and quickly becoming the center of gravity for many leading industries.”
Launched in 2018, Trainual creates a playbook for training and onboarding employees that makes it easier to maintain culture within rapidly scaling companies.
While Ronzio was an experienced entrepreneur even before founding Trainual, he received guidance from the state’s innovation ecosystem through the Arizona Innovation Challenge — one of the largest business plan competitions in the country. The Arizona Innovation Challenge helps early-stage ventures scale and advances innovation and tech commercialization. Trainual is one of 110 companies that have received an award from the program since 2011. Programs like the innovation challenge and the annual Phoenix Startup Week helped accelerate Trainual’s growth within the collaborative Greater Phoenix startup ecosystem.
“I think (it) is so incredible how we all celebrate startups,” Ronzio said. “As we started to grow Trainual, I was invited into StartupAZ Foundation’s Collective that they have, which is a cohort of growing business owners. And as I sat in those mastermind meetings, I got to hear from others that were raising money, convertible notes, things that I had never even heard of before. … I got to just soak in this knowledge and information from people that were a couple steps ahead of me.”
Today, Trainual has a team of almost 100 people that serves nearly 10,000 clients in 183 countries. It raised $27 million in Series B funding in 2021. Over the years of growth since pre-launch, Ronzio said the team prioritized marketing, hiring and retention of leaders and investment in research and development.
“We spend so much of our energy trying to find the right people to bring into our businesses … if you don’t put the attention on retention for the rest of their tenure with you, then you’re always trying to replace the people that you brought in, and it can be a big time suck and resource suck,” he said.
The CORE Institute
Established in 2005 with a vision to transform the deliverance of orthopedic healthcare, The CORE Institute has the ambition to achieve overarching results that impact Arizona and the national system. Starting in a small office in Sun City West with about six employees, the company has grown to almost 3,000 employees and inhabits more than 20 clinical sites across Maricopa County and eight in Michigan. Spawning from the success of this initial venture, Jacofsky and his team also founded HoPCo, a healthcare management service company.
“The cost of healthcare is rising and rising at unsustainable rates, and in orthopedics that trend is actually between 10-15% year-over-year,” Jacofsky said. “HoPCo has shown that it can not only bend the cost curve but deliver a downward trend in cost when it brings its value-based care approach to a new market.”
Among interests of The CORE Institute is weartech development. Its fall-risk development program has a variety of partners around the region, including a fund-matching collaboration with the Partnership for Economic Innovation, nonprofit research affiliate Moore Center and Arizona State University. An ASU doctor originally developed the fall-detection technology, and the university and institute work together on education and research.
“We have a lot of students from the bioengineering program there that are rotating through our laboratories and using our clinical patients as kind of the focus of a lot of the studies that they're doing to validate new technologies and new techniques and it's been fantastic,” Jacofsky said.
Waymo has embraced proactive Greater Phoenix legislation that encourages the developing autonomous vehicle ecosystem. In 2015 and 2018, Arizona Gov. Doug Ducey signed orders that outlined the processes for self-driving vehicle testing and eliminated unnecessary regulations and hurdles.
“Businesses look for certainty. They want to know that if they're going to put a lot of resources into something, they're not going to have to pivot in a few years and change their mind,” Casson said.
Since the California-based firm expanded to Greater Phoenix, Waymo has become a national leader in AV technology. The company is working on development of a car that does not need any human intervention, a step above driver-assist vehicles.
“Every year about 40,000 people die in car crashes, and the majority of those crashes are preventable. They are human-caused error — so sleepiness, driving while intoxicated, driving while distracted,” Casson said. “Waymo was founded on the belief that if you remove the human element from driving, you can eliminate those crashes.”
Foresight from the Arizona government has allowed Waymo to operate and scale effectively, and Casson sees potential in Arizona to become the heart of U.S. tech if the state and region takes lessons learned from previous tech hub predecessors like Silicon Valley.
“There's a sense of possibility and a booming economy, and I imagine that it's akin to what California felt like some years ago,” she said. “Look to places like the Silicon Valley that have already gone through this kind of boom time and take some of the lessons from our experience.”