Companies setting aside space for startups
emolition began last month to clear the way for a 30,000-square-foot expansion at the headquarters of Constant Contact, a digital marketing firm in Waltham. But the new space won’t just house Constant Contact employees. The new “InnoLoft” will invite a handful of startups developing new products for small businesses to shack up for four month stretches, rent free.
The goal, says Andy Miller, the company’s chief innovation architect, is both to help startups cultivate new offerings that Constant Contact’s customers might find useful and have Constant Contact’s employees “exposed to the vibe and the velocity at which these folks work. It does create this energy that I think will be contagious.”
Around Boston and the ’burbs, big companies like Constant Contact, Communispace, PayPal, and DCU Financial are carving out space for startups, and looking for the same infusion of entrepreneurial energy — and potential partnerships — that Miller mentions. Some welcome a range of fledgling businesses, and some focus on a particular industry. Some charge rent, and some don’t.
When Communispace moved into new offices near South Station in 2012, the company, which helps clients like Reebok and Unilever manage online communities of customers, leased extra space to accommodate future growth, explains chairman Diane Hessan. “When we spread everyone out over the two floors, guess what? It felt dead,” Hessan says. “It was depressing.”
Then, when employees were crunched together to create a more energetic environment, 10,000 square feet of space became vacant.
So Communispace started bringing in startups and nonprofits — but charging rent of about $600 per desk, to cover some of its costs. (The rent includes Internet, office supplies, coffee and snacks, and an invite to Communispace’s annual Opening Day party in its Fenway-themed event space.) “The real benefits are less tangible,” Hessan explains. “The space feels alive, and we love helping companies that are where we were in the early days. I literally have heard our employees giving people pep talks.”
The company housing the largest number of startups is the Boston office of PayPal. Its Start Tank space can hold about two dozen ventures, and a new class of 14 will move in this month. Companies can stay for six months, gratis, but they can typically extend their residency another six months.
“Aside from the free space, PayPal has some of the most talented people in the world, and a lot of them volunteer to be mentors and advisers to the startups,” says Polina Raygorodskaya, founder of Wanderu, a site that helps travelers book bus and train travel. “It’s really helpful to be surrounded by people that you couldn’t afford to hire full time, but are willing to give feedback and advice.”
Wanderu moved into its own digs in Downtown Crossing in November. It had four employees when it set up in the Start Tank; it now employs 16, and has raised about $2.5 million in funding. David Chang, the head of PayPal’s Boston office, helped make introductions when Raygorodskaya was raising money for the company.
“For us, Start Tank was about maintaining a lot of that entrepreneurial culture, and helping PayPal get back out there as an innovator,” says Chang. And Chang says there is useful dialogue between entrepreneurs and PayPal employees in areas like social media and loyalty programs that benefits both sides.
Chang says he has spoken to other companies exploring the notion of bringing in entrepreneurial roomies, but these initiatives can come and go if they prove too complex to manage; when leadership changes; or if the company decides it needs more space. The Boston Globe set aside a cluster of cubicles for digital media and advertising startups two years ago in part of its headquarters, but that space is being closed this month.
Vertex, a publicly traded pharmaceutical company, has considered creating space for life sciences startups or nonprofits in its new complex on the Boston waterfront, but no decisions have been made yet, according to company spokesperson Zach Barber. (Vertex chief executive Jeffrey Leiden wrote in a Globe op-ed last year that the city needs to “create office and laboratory space that is financially accessible for small companies to establish and grow their businesses.”)
DCU Financial, the credit union, is one of the latest to create startup space, at one of its offices in downtown Boston. One company moved in earlier this year, and DCU has space for as many as eight, says David Araujo, vice president of information systems. “We are hoping to play a role in the changing environment of the financial services industry,” he says, by bringing in startups working on products related to financial planning or tax preparation, for instance.
Helping to manage startup spaces at companies like DCU and Communispace is Workbar, which operates its own flexible, desk-by-the-month workspaces in Boston and Cambridge. Through its “OuterSpaces” program, Workbar finds tenants and handles the rent, pocketing a management fee. Workbar CEO Bill Jacobson says he’s in talks with a furniture company that is considering setting aside workspace in Boston for architects and designers.
“The overriding motivation,” Jacobson says, “is, ‘Let’s expose our people to these companies, and bring innovation into our building.’ Nobody that we’ve spoken to is looking at this as a significant revenue source.
“It’s more, ‘Can we cover some costs and keep our people exposed to new ideas and concepts?’ And if they have extra space, this is much better than having it go empty.”
Correction: Due to a reporting error, Bill Jacobson’s name was misspelled in an earlier version of this story.