Housing Complex

Silicon Valley NW

The Startup District: Zvi Band and other techies want to be near each other (and Metro).

Like many aspects of D.C. that used to be great—the jazz scene, Anacostia’s business corridor, historic rowhouses—the Washington-area technology economy is in recovery. After mega-million dollar companies like America Online and MCI WorldCom made D.C. an epicenter of the Internet, the dot-com crash poisoned the ground for new startups: Any capital that still existed sought refuge in the safe world of government contracting. Talented engineers clung to their day jobs, keeping any innovative projects they might dream up on the shelf.

Finally, the tech sector is growing back, with a burgeoning corps of tiny-to-medium-sized firms that are attracting the notice of venture capitalists and angel investors. Names like LivingSocial, Opower, HelloWallet and EverFi get reeled off again and again to demonstrate that something is really happening here.

But while some of the more established names have stayed in the suburbs, the younger set involved in D.C.’s technology startup scene 2.0 has little interest in the big-money powerhouses of Reston and Bethesda; they’re frankly disdainful of what 27-year-old web developer Michael Mayernick calls the “Wilson Boulevard thing.”

“It’s like fucking West Virginia for most of us,” says Mayernick, who co-founded a startup collective called Proudly Made in D.C.. “I don’t even like going to Arlington.”

“There is a stigma about not being in D.C.,” adds Peter Corbett, who started a digital ad agency three and a half years ago in his Logan Circle apartment before leasing space in north Dupont. “‘Oh, you live in Virginia, I don’t have my passport on me. I don’t have a boat, I can’t cross the river.’”

The new breed—which often characterizes its product type as “disruptive”—doesn’t want to be just anyplace in D.C., though. They’ve clustered in the densest, buzziest parts of the city: Gallery Place, around U Street, in Dupont Circle, and Georgetown. It’s a geographical distribution that Corbett, who this year has been organizing tech meetups that have drawn over 600 people to hear speakers on a weekday night, calls the “arc of innovation.”

Even though their work is by definition almost entirely virtual, it turns out small tech startups crave company. It’s a lonely existence in the early stages, and sharing office space or just hitting the same coffee shops can be the only way to escape crippling isolation. Meanwhile, these entrepreneurial types rarely have cars—or the time to drive them to some office park in McLean.

All of which is very good news for the District: The city is now a magnet for young creative people, and small startups that stand to make a lot of money in the future have an allegiance to the place where they were founded. Still, that’s a fragile ecosystem, in need of careful nurturing. The pull of Silicon Valley is hard to resist.

“It’s a matter of making sure that people stay here and never leave,” Corbett says.

What are the benefits of having everybody in one place, anyway? It’s pretty simple: Clusters of sufficient density and mass create their own gravitational pull. At some point, the rest of the world—specifically the part of the world that has lots of capital to invest—has to realize you exist.

That’s part of the reason why Mayernick and another 27-year-old developer, Zvi Band, started Proudly Made in D.C. Finding that the money people were looking for the next hot prospect in Boston, New York and San Francisco, they put together a list of some 145 small companies based in or around the District. There was some debate about naming the ad hoc organization; a few outfits still operating in the suburbs wanted it to more obviously represent the region, rather than D.C. proper. But that wouldn’t have created the national recognition the group was going for. “Proudly Made in the D.M.V” doesn’t have quite the same ring to it, after all.

The more important benefit, though, is creating an environment where people are talking about startups all around you, where a business type might pair up with an excellent engineer at a happy hour, or a software developer might find someone to help with a coding problem at a local coffee shop. Spending a few hours working at a friend’s office—Corbett’s iStrategyLabs space in Dupont has something of a drop-in atmosphere, for example—after going out to lunch with a business partner, then walking home before going out that night to a party full of startup people, means you waste no time between productive activities.

Silicon Valley’s highways and office parks, by contrast, aren’t particularly conducive to that kind of fluidity (“It’s horrible,” Mayernick notes, looking desperately unhappy just thinking about it). It’s just that startup activity is so dense that technical entrepreneurship ends up permeating the air you breathe.

“Why Silicon Valley works so well is that you have these serendipity chance encounters that turn into big events. You’ll meet someone at a Starbucks and they end up being an investor in your company,” says Collin Gutman, a local entrepreneur who started a side project called PlusSide DC to work towards creating a hub-like shared office space. Now, “You’ve got a bunch in Bethesda, a bunch in Northern Virginia, and then you’ve got Dupont Circle. You tend to run into everybody but the other startup people.”

In surveying the local startup scene, Gutman found a lot of demand for affordable space. But the young entrepreneurs—overwhelmingly white and male—aren’t willing to take a chance on more marginal areas where rents might be cheaper. Nascent plans for workspace in Ivy City, around Gallaudet University, were shelved. “When you have a bunch of affluent young entrepreneurs walking around with laptops, crime becomes an issue,” Band explains.

The startuppy appetite for risk, it seems, only goes so far.

That cosmopolitan taste, of course, is a pricey one. Entrepreneurs are attracted to some of the highest-end office markets in the city, like Chinatown, anchored by D.C. tech golden child LivingSocial. Four years after starting at Georgetown University, the 2,000-person company has spread its 700-odd local employees across three buildings, and is outfitting trophy real estate kitty corner from the U.S. Treasury. Georgetown is home to smaller companies like SnapCloud, Personal.com, SalesVote, Pascal Metrics, and Wiser Together.

Even smaller groups are scattered in between, often using remnants of leases found through someone’s client. Startups in the earliest stages might just desk surf in bigger companies’ offices, or settle down for the day in a coffee shop (if you see a trio of youngish guys with larger-than-average Macbooks camped out at Tryst, Busboys & Poets, or one of the several Caribou Coffees on M Street, ask what they’re coding).

What’s needed, under those conditions, is something in between: a big warehouse where lots of startup types might filter through during the day, paying some rent for the privilege. New York City, for example, has a 20,000 square foot space in the Flatiron District called General Assembly, fostering a class of 16 startups and hosting programs and events for anyone who wants to participate. A D.C.-based advertising agency, the David All Group, launched something like that when they grew too big for their offices on New York Avenue and 12th Street NW—starting this summer, they’ve invited four young companies to set up shop at the newly-christened “DAGpad” in exchange for a certain number of hours of contracting work, in a kind of barter system. One of them, CampusSplash, had already outfitted their corner with beach balls and rubber-ducky wall stickers when I visited, as if there were some manual for startup interior decorating.

In search of more space, the web developers turned to the people who have it: real estate developers. Specifically, Douglas Development, whose inventory of vacant buildings eclipses most District landlords’ entire portfolios. They came close to getting a deal for Mayor Vince Gray’s old campaign headquarters on 6th Street NW, but then Douglas got the financing to develop the whole block. Naturally, there was another option: The art deco Manhattan Laundry building on Florida Avenue right off 14th Street, which a charter school had just vacated. This week, Douglas offered them the building for three months, free of charge. The organizing startups hope that given some lead time, they might be able to charge nominal rent for the small businesses that camp out there, putting the communal home in a position to stick around for the long term.

The pitch, of course, is that the energetic young tenants will benefit the landlords too—when they all get their big break and need to graduate to suites of their own.

“We get really smart, fun, creative people who are going to being a lot of life and excitement and activities and people from out of town into an area,” says Gutman, of PlusSide. “In addition, I think some of these startups are going to be really big, and they’re going to need LivingSocial-type space.”

At least, that’s the dream.        CP

Visit the Housing Complex blog every day at washingtoncitypaper.com/blogs/housingcomplex. Got a real-estate tip? Send suggestions to ldepillis@washingtoncitypaper.com. Or call (202) 650-6928.

  • Carden McGehee

    Hi Carden,
    Here's an interesting article about the mass of "techie" firms in this part of D.C., including Living Social. Will you be at today's meeting and will you have a response for Herb regarding leasing space at Gallery Place to Living Social?
    Best - Paula

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  • SeanG

    I am a white entrepreneur living in NW DC with a day job as a federal contractor and am very excited to see entrepreneurship growing in the District. But I think there is a danger to say we want to promote bringing in more white outsiders to the region as our vision for a successful city. That is going to cause more political tension. I would propose focusing on promoting entrepreneurship that serves the entire community, especially people already here. I think DC should be focusing more on empowering the predominantly minority and unemployed citizens to engage in startup activity. My personal vision would be see the city develop an innovation district on Poplar Point (or wherever) that encourages a broader, more inclusive type of enterprises. Enterprises that are not just web startups, but also other technology, manufacturing, services, music studios and businesses that employ people and produce products, not just push more adds. The web companies are happening, and should be encouraged, but lets try and get the entire community on our entrepreneurial rocket ship. That's my vision...

  • http://blog.clearlyinnovative.com Aaron Saunders

    The art deco Manhattan Laundry building on Florida Avenue right off 14th Street

    I am interested in this space for my mobile development consulting business, , how do I get more information?

  • http://istrategylabs.com Peter Corbett

    Aaron: submit your info to http://plussidedc.com and they'll be in touch.

  • http://distcurm.blogspot.com/ IMGoph

    i think the point about "walking around with laptops" in ivy city is bunk.

    there are many more muggings in dupont and around u street than there are in ivy city.

  • http:www.magicgameforyou.com.com Bart Gehr

    A few of the greatest rants and also a few of the best game design discussions I have read on Lum's. It was significant best sites for news in regards to what was truly crucial to players. Whether it had been a major exploit or some 'booby dress', just read was very familiar with what members of the squad of MMOs liked and disliked. Had been holding in tune with the information affected the game that players are playingin an MMO, that is sometimes very different from game the developers perceive them to be playing.

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