Callowhill coworking space Venturef0rth, home to a cadre of well-known Philly tech startups since its inception in 2012, closed its doors for good last Friday.
Executive Director Gary Smith, who officially took over the space alongside partner Joshua Matthias in 2016, sent an email to members on September saying the competitiveness of the coworking industry and a lack of a profitable model left them no choice but to shutter the space. The honest, kind missive from Smith warned members of the possibility that, by Oct. 1, they might be required to vacate the building.
And so it was.
“With a heavy heart, I have decided to close Venturef0rth. While Venturef0rth is a wonderful place and has many strong attributes, it is operating on an intensely competitive landscape. I have been unable to chart a course of sustainable profitability through this landscape,” Smith wrote. “Having concluded co-working promotion is not one of my strengths, I have decided to shut this venerable establishment down in an orderly way and with the dignity it deserves.”
The space had been grappling with an occupancy issue, Smith told Technical.ly back in May. At the time, occupancy of the 10,000-square-foot space was at 40 percent.
“And that’s not enough,” Smith told us then.
Smith, an attorney focusing on enterprise law, is the third owner of the fabled space, which was founded by a trio of Philly entrepreneurs in 2012. Elliot Menschik, Jesse Kramer and Jay Shah initially set out to make of the spot an early space incubation/coworking space combo.
“We built the place we wished was here when we started our company,” cofounder Kramer — who then also worked at AWE Tuning — said at the time the company was looking for companies to onboard.
Then, in 2014, it was acquired by entrepreneur and inventor Marvin Weinberger (with Smith as counsel in the purchase) after trio of founders decided to focus on their day jobs. Per cofounder Menschik, at the time of the sale it was “boom time” for the coworking spot, at a time when global bigwigs like WeWork and national chains like MakeOffices and Industrious hadn’t rolled into town. Even homegrown coworking spot Benjamin’s Desk had only its flagship location at 1701 Walnut St.
(Boy, have things changed since then.)
But in June of 2015, the CEO put out a distress call on Philly Startup Leaders’ listserv: the company needed $100,000 in the next 30 days or it would call it quits. A mystery donor stepped with a $50,000 donation that saved the day and “turnaround man” Smith was appointed to lead the company.
Venturef0rth then underwent a renovation that was completed in the fall of 2016. It aimed at striking a balance: a laid-back environment, yes, but a “more serious” vibe for companies/professionals in a more mature stage. The lawyer cedes with honesty: marketing the space was not his forte.
“I’m working on getting better at that,” he said in May.
Ask Smith about Venturef0rth’s location and it appears to be a pain point.
“Walkers generally don’t want to come north of Race Street,” Smith said. “Coming under the Vine Street overpass is like a psychological barrier,” Smith said. Per former owner Weinberger, the real challenge of the location was the lack of mass transit other than buses. But there’s some nostalgia there still.
“I love the neighborhood and the building and I’m really sorry that things didn’t work out there,” said Weinberger when Technical.ly notified him of the news. The Haverford resident keeps busy these days tending to his tool business, Innovation Factory, and as organizer of the regular Maker Meetup event series.
(Callowhill has been touted by some, due to its open spaces and available real estate inventory, as a possible site for an Amazon HQ2 site in Philly.)
For Michael Bertoni, former head of business development at Venturef0rth, the remodeling process is partly to blame in the company’s demise.
“We went through a major overhaul and the company spent a lot of money on improvements, somewhere in the six-figure range,” Bertoni told Technical.ly. “As a result we lost a lot of people.”
— Michael C. Bertoni (@MichaelBertoni) October 1, 2017
The eccentric Bertoni — who’s also founder of consulting company PhillyTech — said the competitive coworking environment is indeed part of the equation, but also hinted at some management issues. “There wasn’t commitment,” Bertoni said. “You can’t run a coworking space on the side.” He holds no grudges, though.
As for where the Venturef0rth diaspora ended up, Bertoni had initially reached out to The Yard to set up a transition of members to the Brooklyn-based company’s new Philly spot. The deal, however, didn’t come together: Bertoni connected instead with Benjamin’s Desk, which offered Venturef0rth members access to two of their spots at a discounted rate matching what they formerly paid.
Per Benjamin’s Desk’s Tamra Thompson, two companies with seven members have already transitioned, with a few more considering the offer that’s limited to the firm’s 601 Walnut and Powelton Village locations.
“It’s a phenomenal environment,” Bertoni said of the now shuttered space, which is owned by Center City-based M.S. Fox Real Estate Group. “I could live here. It sucks, man. I’m so upset about it.”
The first tip-off that the space was shutting down came to us by way of REC Philly’s David Silver.
We bumped into the founder all set-up with part of his team at Benjamin’s Desk 601 Walnut location. “We loved the space,” the founder said. “It was a great environment to bring in our team in back in 2014.”
As time went on and management changed, Silver said, the turnover in companies affected the energy that was once found at the coworking spot.
REC Philly followed a tradition of well-known tech companies based out of the Callowhill spot. Think SnipSnap, which then got acquired for $6.5 million in 2015. Think CloudMine, which is now Center City-based and has raised a few million dollars in venture capital. Startup PHL once had a presence there, as did the Inquirer’s Project Liberty incubator.
Former Technical.ly Philly lead reporter Juliana Reyes said the pod-filled coworking hub felt a bit like the center of the startup universe when she started writing about the Philly tech community.
“For me it represented the early-stage Philly tech incubator at that point in time,” Reyes said.
A first-hand witness to that era, CloudMine’s Brendan McCorkle also remembers Venturef0rth as a pocket of sharp entrepreneurs in the early years, particularly those with Dreamit ties (for context, when Venturef0rth cofounder Menschik left the coworking game, it was to focus on his role as managing director at Dreamit Health).
When I was stuck on something, I could ask someone who wasn't drinking the CloudMine Kool-Aid.
McCorkle remembers SnipSnap and his CloudMine having a “Philly startup codependence, a funny gravity there.” Both startups graduated from the coworking space to private offices near each other in Center City. At least in part, the entrepreneurs credit the spot’s collaborative vibe with the early growth of the company. “When I was stuck on something, I could go ask someone who wasn’t drinking the CloudMine Kool-Aid.”
For McCorkle, who recently stepped down as CEO to let exec Stephen Wray lead the way, the Callowhill space let CloudMine act bigger than it was in that stage. Investors and prospective clients read the shiny office, the open floor plan and crowded huddle areas as good signs, making conversations easier as the pro game came together.
“Fighting up a weight class,” the founder called it.
(More memories? McCorkle goes straight for the water tower logo. “I can’t remember if they were cool with it before … or after we did it.”)
Meanwhile, Reyes, who penned some 40-plus Technical.ly articles about the coworking center through the years, agrees that there’s a tinge of nostalgia involved in the news of the shutdown. But you won’t get much more than that from the pragmatist scribe.
“It was an important part of Philly tech history and it helped the scene form connections and incubated some of our biggest startup players, but maybe it served its purpose,” Reyes said. “Maybe we should just be grateful for that and move on.”
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