What lessons can local tech economies learn from Work Hard Pittsburgh’s shutdown?

Amid all of the good news around Pittsburgh’s tech economy this year came an announcement signaling a need for more localized community support.

Last week, after almost 10 years of operation, tech entrepreneurship org Work Hard Pittsburgh announced that it would shut down. Between a coworking space, funding support, freelance work opportunities and coding bootcamp Academy Pittsburgh, Work Hard offered a hub for budding founders and technologists, with a focus on supporting those from backgrounds underrepresented in the industry. Academy Pittsburgh, for its part, will live on, but the rest of Work Hard will cease operations by the end of the year.

This announcement was a long time coming, Work Hard founder and Executive Director Josh Lucas told Technical.ly. In May, the organization announced to its members that money was tight.

“It was sort of like an if-then statement,” Lucas said. “If certain funders give us money, everything’s cool. And if certain funders don’t give us money, we’re done.”

That funding didn’t come through, marking the end of what Lucas described as a decade-long struggle to make the Work Hard business model sustainable. A cooperatively owned organization involving several LLCs supported by freelance work, philanthropy and other sporadic sources of income, Work Hard had a lot of complex moving parts. In fact, “we’ve almost shut down every year since the first grant in 2015,” Lucas said. “We’ve almost always been out of money.”

By the end of the year, the organization will no longer have any full-time or part-time staff, and instead will have contract workers carry out the full liquidation, asset management and shutdown. The coworking space and main property of the organization located at 744 E. Warrington Ave. will be sold, as decided by the building owner and Work Hard fiscal sponsor New Sun Rising, Lucas said.

While philanthropy helped sustain the organization through previous years, the financial cutbacks of the recession caused by the pandemic limited the frequency and size of donations Work Hard was able to attract. The complexity of the organization’s multi-faceted structure paired with a reliance on support from philanthropy are likely big factors in Work Hard’s winding down, Lucas said.

Program officers at philanthropic orgs and foundations are often encouraged to become experts on the organizations they recommend for donation. But with the sometimes confusing web of businesses under the Work Hard umbrella, Lucas wonders whether doing that became overwhelming.

“If you don’t truly, deeply understand something, it’s certainly easy to diminish its value and move on to other projects,” he said. “Especially ones that garner national attention or have big institutional partners.”

The employees required to support a mission-driven organization like Work Hard were an asset whose value Lucas said was also underestimated at times.

Key staff involved worked at half of what they were worth on the open market for years. They had skin in the game because they believed the mission was important.

“If we’re going to build an equitable tech and tech adjacent economy, then we need the best talent working on that mission. That talent is super expensive,” he wrote in a follow-up email to Technical.ly after an interview. “In the case of our ecosystem, key staff involved worked at half of what they were worth on the open market for years. They had skin in the game because they believed the mission was important.” Philanthropic orgs, he argued, would do better to understand the salaries required to keep those people at organizations, or attract their replacements when needed.

Beyond digging into the finances of why Work Hard is shutting down, its closure is sobering for a tech community that has boasted big IPOs, awards and national recognition this year. It begs the question of whether or not those more marketable successes are really enough to make Pittsburgh’s tech industry an economy that truly benefits everyone here. And while both Lucas and Academy Pittsburgh director and founder John Lange think that Work Hard’s community will keep in communication and support each other, the loss of that formal organization for people to go to could allow old barriers to entry in entrepreneurship and tech to reform.

Work Hard’s loss will make an economic difference in the entrepreneurship community. With an investment total of about $2.5 million over time, the organization’s initiatives led to $30 million in wages earned as salary, including $15 million to “people from underrepresented groups in the tech economy from Academy Pittsburgh training,” per Lucas’ letter to the community. Freelance workers associated with the organization raked in a reported $10 million worth of wages.

Despite those impressive returns, Lucas isn’t sure what else can be done to convince philanthropic or other donating organizations that an organization like Work Hard is essential to the community. But, he argued, this is a chance to really dig into the financials of what happened and find those answers.

“I think grants are not the right way to do this,” Lucas said. “There needs to be impact investing that doesn’t just look at the financial return, but looks at the the impact metrics as part of the return for the region.”

Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.