Somewhere between “early morning meetings” and “the afternoon commute,” every burgeoning startup would love to include “growing too fast” among its list of gripes.
In the beginning, Lyn Mettler and her partners at Step Ahead Inc. were working from home, racking up miles and coffee calories as they scheduled meeting after meeting at clients’ offices or convenient coffee shops.
“Once we started to create a company, that became more of a challenge,” she says. “We didn’t have any space to meet as a team.”
The solution came in Summer 2009 in the form of the old Hollywood Video site at the corner of East Bay and Calhoun streets. The city turned the storefront into Flagship, a home for roughly a dozen tech-based companies with big ideas, but little capital to afford downtown rent prices.
Step Ahead moved into one of the smaller, one-person units. Like other startups at the site, the company thrived and quickly outgrew the space. “It was getting ridiculous cramming three people into one office,” Mettler says.
The company moved to a larger unit. Now with four full-time employees, they’re looking for more space, but the city has run out of room for these successful tech businesses to grow.
The lack of downtown options has Step Ahead looking at Noisette, the Navy Yard redevelopment in North Charleston where other tech companies have launched and prospered. The potential exodus of these young, successful companies has city officials sweating.
“We don’t want a company born and incubated here to go to another part of the region,” says Mayor Joe Riley.
The solution may be in doubling down — actually, more like tripling down — on the city’s investment in these tech-based startups, augmenting the popular video store-turned-incubator with a neighboring abandoned TV station-turned-incubator.
In February 2009, just as President Barack Obama was getting comfortable in the Oval Office, Riley and Ernest Andrade, the city’s director of business development, were getting antsy about the economic meltdown. But instead of cooling off recruitment efforts, the city went in the opposite direction.
“It’s important that we not be more passive, but rather we be more energetic,” Riley says of remodeling the video store into small offices, two conference rooms, and communal space. The city supports a variety of small businesses with counseling and workshops, but it made a particular investment in fostering technology-based industries.
At Flagship for more than a year, Mettler says having the office has given her tech company more credibility with clients while its growing staff has gained a conveniently located home downtown. It has also provided opportunities for networking, with clients and leads coming from other tenants in the building.
“Everyone is doing exciting things,” she says. “All around, it’s a good opportunity.”
The project also has been a win for the city as high-paying, high-tech jobs are planted on the peninsula. The average wage at a Flagship company is $79,000, with more than $5 million in payrolls created by current and former companies housed at the site.
The venture required little money from the city. There was some capital investment to upfit the building, but the lease and maintenance are taken care of by the modest rent for the tenants ($450-$775 at the current site). And, with downtown prices keeping many businesses off the peninsula, there’s been no shortage of interest. The Flagship space was designed for 11 work areas, but the city has squeezed in 14 businesses and turns away about one budding entrepreneur a week.
Over the next few months, the city will retrofit the former Channel 5 TV station next door to house another dozen-or-so companies with more room and more privacy than the small video store can offer. FS2 will include added services like indoor bike parking, shower space, possibly an outdoor conference area, and a lounge for after-hours networking.
The city isn’t alone. TwitPic founder and recent Charleston transplant Noah Everett is building his empire in the Lowcountry and hopes to make the area the Southeast’s Silicon Valley. And private companies and nonprofits are offering similar programs to the city’s Flagship, including Spark!, a shared space conveniently located just across the street.
Andrade welcomes an expanding market. “Our hope is that they’ll emulate privately what we’ve demonstrated publicly,” he says of support for small startups. “Flagship gives us the ability to house them and take care of them and let them focus on their business.”