In this edition: Keurig’s quest for a new coffee CEO; Boston City Council tackles building security; Pags teams up with robots.
Jon here, running solo for another day until Shirley returns from vacation. Today, I’m writing about one of my favorite parts of Boston, the Financial District, and why the neighborhood’s vibe is changing.
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Featuring: Chad Laurans, Doug Bergeron, Steve Oblak, Steve Pagliuca, Hilary Schneider, Andrew Bialecki, Herby Duverné, Tim Cofer, Ty Shay, Henry Santana, Rick Cohen, Ruthzee Louijeune, Sudhanshu Priyadarshi, and more.
Local tech stalwart SimpliSafe celebrates its 20th anniversary this week. But here in the Financial District — and I use that term more loosely each year — we should celebrate something broader: a parade of tech firms bringing new vitality to the downtown, a march that’s been led by the home-security company.
SimpliSafe signed a lease in the dark, work-from-home days of 2021 to relocate into several lower-level floors at 100 Summer, offices once occupied by State Street. The 150,000-square-foot lease, a doubling in size from SimpliSafe’s previous location on Washington Street, remains one of the largest downtown expansions of the decade.
The only company to add more space downtown since the pandemic? Another tech firm, according to commercial real estate brokerage Hunneman. Klaviyo, which makes marketing software, now occupies 256,000 square feet at 125 Summer St., an Oxford Properties building just down the street from SimpliSafe.
Others are piling in. DraftKings will move to Oxford’s 225 Franklin from the Back Bay. In that same building, also once a former State Street home, cloud-computing firm Datadog is expanding. And a few blocks away, fund giant Wellington Management will share BXP’s Atlantic Wharf tower with the likes of Dynatrace (relocated last year from Waltham) and Hi Marley (expanding from a different downtown address).
This shift from jacket-and-tie to T-shirt-and-jeans has been underway, to some extent, for a decade or more. The financial sector’s downturn during the Great Recession, along with several bank mergers over the years, opened up space downtown. Promising tech firms such as Sonos and Carbonite moved in during the 2010s, from Cambridge and the Back Bay, respectively. (Klaviyo and SimpliSafe arrived as well, though in much smaller form.)
Then the pandemic hit, and more office space hit the market. The tech presence continued to grow in the district. Perhaps no firm exemplifies the transition more than SimpliSafe.
Chad Laurans and his wife Eleanor started the company in their Cambridge apartment; Laurans kept his soldering iron on the kitchen counter to work on prototypes of home-security devices. It was a Harvard Business School project of his, come to life. He had heard from friends who were burglarized and later wanted to get an alarm service for their homes, but could not because the companies required long-term contracts. His solution was to come up with a do-it-yourself system: gizmos that users could install at home — first sensors and then cameras — with SimpliSafe monitoring from afar.
By the time Laurans had gadgets to deliver, he had moved the company to a spot on Third Street, in Kendall Square’s semi-industrial outskirts. But SimpliSafe would reach critical mass in downtown Boston, not Cambridge. Laurans remains SimpliSafe’s board chairman; chief executive Hilary Schneider and president Ty Shay joined when it was acquired by private equity firm GTCR last fall. (The company doesn’t disclose its revenue, other than to say it keeps growing, year over year.)
SimpliSafe employs more than 500 people in Boston, and is trying to fill 30 or so jobs at the office today, including roles for engineers and marketers. It’s not as many people as previous CEO Christian Cerda had hoped when he talked with me about signing the lease nearly five years ago. But the firm is still one of the biggest private-sector employers in the Financial District, and it’s investing in additional product-testing space at its headquarters. Schneider, who hails from Silicon Valley and is based here during the week, likes downtown’s walkability — and of course the city’s pool of talent.
Then there’s Klaviyo, which employs roughly twice as many people in downtown Boston as SimpliSafe. Cofounder Andrew Bialecki has told me that he wants to make his firm’s offices a hub for meetups and other gatherings. Judging from the throngs of people who packed the place for the kickoff of Boston Tech Week in May, he’s off to a good start.
In his final inaugural address as mayor, the late Tom Menino famously declared in 2010 that the South Boston Waterfront, now known as the Seaport, would be the city’s “Innovation District,” a place for entrepreneurs and startups to mingle. Rapidly rising rents amid the Seaport’s development boom all but ensured that vision would not become a reality. Now, it seems only big companies like Amazon can afford to lease space there.
Maybe Menino picked the wrong neighborhood. Tech employment in downtown hasn’t overshadowed finance yet. But it’s getting easier to envision a day when it will.
YOUR TURN
With the decline of the financial services industry in Boston, is it time to rename the Financial District?
HEARD AROUND TOWN
KEURIG NEEDS JAVA JOLT
It’s getting harder to find a new coffee CEO than it is to find a cup of Peet’s inside a Dunkin’. Keurig Dr Pepper is splitting up, ending a merger of hot and cold drinks that European investment firm JAB orchestrated in 2018. Instead, the goal is to spin off a global coffee powerhouse, one that includes the JDE Peet’s franchise as well. The only problem? Finding a CEO to run it. First, Keurig announced it would be Sudhanshu Priyadarshi, its Burlington-based CFO (now at Planet Fitness). Investors didn’t seem to like that. Then Keurig tapped Rafael Oliveira, who led JDE Peet’s. Now, Oliveira is gone, too. Last week, Keurig CEO Tim Cofer promised on an earnings call that the CEO search is progressing nicely. Cofer said it’s attracting “considerable interest from highly qualified candidates.” But it’s hard to blame one analyst on the call for admitting there’s “just a bit of concern in the market” about additional delays.
UNARMED FIGHT
The hot topic at City Hall today? Building security. A City Council committee held a hearing on Tuesday about a proposed ordinance filed by councilors Henry Santana and Ruthzee Louijeune to establish minimum training requirements for unarmed security guards. It’s a proposal that is being pushed by the SEIU 32BJ union, which represents guards and other building workers. Santana and Louijieune say state law already requires training standards for armed security guards, so it’s time for Boston to step in and provide something similar for unarmed guards. But it’s getting some pushback. Windwalker Group chief executive Herby Duverné testified that this ordinance will hammer small businesses like his security company, which employs around 200 people. Duverné says he believes in training, but adding more mandatory costs will make small companies like his even less competitive.
SEEKING THE CEO’S CHAIR
Utah-based activist investor Doug Bergeron is taking aim at the leadership of Ethan Allen, the fancy furniture seller in Connecticut, and he has a well-known Boston retail executive on his side. Last week, Bergeron announced he is nominating a slate of six board members to replace Ethan Allen’s current board after accumulating a 5 percent stake in the company. Among his nominees: former Wayfair chief commercial officer Steve Oblak, who saw revenue grow at the Boston-based retailer from $250 million to $12 billion during his 14 years there. Bergeron says he is frustrated with Ethan Allen’s listless stock price, declining revenue, aimless digital strategy, and overly controlling leadership by 82-year old CEO Farooq Kathwari. Plus, the HQ parking lot empties out before 6 pm every night, he says, a barometer he uses to measure how engaged employees are in a company’s success.
TEAMING UP WITH ROBOTS
From the Boston Celtics to warehouse robots? Private equity veteran Steve Pagliuca just joined the board of Symbotic, prompting the robotics company to expand its board from nine to ten members. He is keeping busy after losing his bidding for the Green Team last year to a group led by another private equity executive, Bill Chisholm. (Pags was an investor in the previous C’s ownership group.) He then led a group that tried to buy the Connecticut Sun basketball team, but the WNBA thwarted that effort; he still owns the Atalanta BC, a soccer team in Italy, and remains a senior advisor at Bain Capital, where he was once co-chairman. Symbotic chief executive Rick Cohen says his tech background at Bain will be quite helpful as Symbotic gets serious about considering acquisition targets.
DOUBLE TAKE
No one seems to like data centers anymore these days. The industry just suffered another loss, this time courtesy of a Middlesex Superior Court judge. On Monday, Judge C. William Barrett halted a Markley Group data center expansion in Lowell. Neighbors, working with the Conservation Law Foundation and others, sued Markley and the state Department of Environmental Protection, claiming the neighborhood wasn’t given proper consideration before DEP issued permits for eight new backup generators. Markley has installed four already, but the judge’s order blocks the other four for now.
The Lowell battle has become a poster child in Massachusetts for the blowback against data centers, but it’s actually an outlier because the giant building (a former Prince pasta factory) is so close to a neighborhood. This is unusual. Maybe pay attention instead to the dramatic turn in Westfield, where city leaders recently imposed a data-center moratorium even though the big project they have faced would go up in an industrial area where homes are much farther away.
THANKS FOR READING POWER PLAY.
Today’s edition was edited by Greg Huang and Andy Rosen, and produced by Jack Osmond.
Have a question for the team? Email us at powerplay@globe.com.
Delivered Tuesday and Thursday (in summertime).
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.