Sunday, October 24, 1999

Over-the-Rhine becoming Silicon Alley


Internet entrepreneurs lured by fiberoptic access, cheap loft rents, eclectic streetcape

BY JOHN BYCZKOWSKI
The Cincinnati Enquirer

blackshaw
Pete Blackshaw hooked up with the nonprofit Main Street ventures to start an Internet company.
(Yoni Pozner photos)
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        At the intersection of Over-the-Rhine and the information superhighway, Pete Blackshaw found himself Friday sitting on the floor of the new headquarters of his Internet start-up, code-named Project Bark.

        A month ago, he quit Procter & Gamble to start the company with three partners. You can follow their exploits at www.startup-tv.com, but you still won't learn what the business will be. Not until December, he said, when they roll it out.

        He and his venture capital could have gone anywhere; San Francisco or New York's Silicon Alley come to mind. But here he is at 12th and Main, across the street from Westminster's Billaird Club and a plasma center, in a third-floor loft furnished only with the stuff left behind by the previous tenant and the laptops and cellphones brought by his partners, plus one Macintosh computer on a table in the front.

        "Some of my California friends think I'm crazy, but I really think this is a wonderful place to start a business," he said.

        Over the door to the loft hangs a sign" "The Consumer Will Shine in the Digital Rhine! "

faces
The new face of Main Street: Mark Richey of Synchrony Communications, Shawn Reynolds of VisualNet, and Brad Wolfe and George Molinsky of Main Street Ventures.
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        Cincinnati's up-and-coming bar district is now an up-and-coming technology district, home to a growing number of Internet designers and programmers. Cheap office space and cheap access to Cincinnati Bell's high-speed network make it affordable for technology start-ups, and the funky neighborhood makes it interesting.

        “I do think something's happening. I do think this is the beginning of our own Silicon Alley,” said Jack Wyant of the Blue Chip Venture fund. Blue Chip already has funded ventures on Main Street and is looking at others.

        There are dollar signs in people's eyes. Project Bark got venture funding from Blue Chip and from out-of-town sources. Suddenly, there's buzz about how much office space companies will need next year, and of venture capital and stock offerings for the ideas they can't talk about right now. At least three other companies are said to be looking for space on Main.

INFOGRAPHIC
Map of Digital Main Street
        But Shawn Reynolds of VisualNet, another young company on Main Street, said money is not what's energizing that area.

        “Having the opportunity to own a piece of something, and do something on your own, that's the great motivator,” he said. “You really don't know what the next step is going to be. It's really exciting.

        “If it fails, big deal. Get a new concept. I've got a million of them.”

Internet revolution
        The benefit of a networked economy is that geography doesn't matter. One end of the wire doesn't care if the other is San Jose, Calif., or Cincinnati. Companies can collaborate from anywhere.

        But geography does matter, because not all problems can be solved by wire. Start-up companies in particular need help with details. Places like San Jose have the culture and the money to incubate start-ups, but for years, Cincinnati — lacking venture capital and people skilled at making companies happen — hasn't been able to play in that league.

        The Internet, however, is beginning to overwhelm the local conservative bent. In the past two years, “We began to see an uptick in people seeking legal services from us” for starting ventures, said George Molinsky, an attorney at Taft Stettinius & Hollister. Entrepreneurs had ideas and skeletal business plans, but “they're coming in with gaps in meeting the needs of their businesses.”

        Some of the people in companies in the Main Street area — Ethos Interactive and Digital Bang, for instance — had already begun meeting informally, having coffee at Kaldi's Coffee House or beer at one of the neighborhood taverns to kick around ideas. With Mr. Molinsky and others, that network five months ago became Main Street Ventures, a nonprofit intended to give technology entrepreneurs the help they need.

        Project Bark and VisualNet are among them. Mr. Molinsky said most people coming in with ideas are non-technical, and they're looking for technical help. Main Street Ventures hopes to turn Main Street into a community of programmers, Web designers and other technical types, helping people like Pete Blackshaw set up shop.

        In start-ups, “there are all these incredible needs you have” — from finding Java programmers to incorporating and getting insurance — “that you don't know where to turn to,” said Brad Wolfe, a computer consultant and partner in Main Street Ventures. By providing answers, “We're trying to attract a lot of high-tech talent here in town.”

        Main Street is a good location for many reasons, Mr. Molinsky said. “You look up and down Main Street, a great deal of investment has been made at the street level.”

        Landlords in the past dozen years opened the bars that brought in the young people who fell in love with the alleyways and the lofts. “They figure, if we can drink here, we can also have our companies here,” said Bob Schneider, who owns five buildings there and is president of the Over-the-Rhine Chamber of Commerce.

Urban area with allure
        With lighted storefronts and police on the beat, safety isn't a concern for these companies. The office space is cheap and interesting, and a 700-car parking garage opened off Main last month. “Young people who are starting these businesses are energized by the environment here,” Mr. Molinsky said.

        Bandwidth is another issue, and Main Street is rich in it. Programmer Ed Estes moved his company, Digital Bang, to Over-the-Rhine when he discovered how much cheaper high-speed Internet access is there. He wanted to operate Digital Bang out of his Oakley home but found that a T1 line would cost $500 to $600 a month.

        By moving near downtown, he gets the same line for $130 because it's close to Cincinnati Bell's fiberoptic loop. He found space on the second floor of an old firehouse at the east end of 12th Street for $450 a month, so he gets Internet access and an office for what it would cost for just access in Oakley.

        “We've got great space, good access. It made a lot of sense,” he said.

        Real estate broker Larry Rytel of Colliers International represents the Hanke Building at 1128 Main, which is being renovated for office space. He said he's gotten a lot of interest from technology companies.

        “There's a lot of young people that work for these kinds of companies. They like the informal atmosphere. It's not like Fourth Street, where you have to wear a shirt and a tie every day,” he said.

        Mark Richey's Synchrony Communications is looking to move from Blue Ash; the company is seriously considering Main Street. “It's got the right edginess to it, the right atmosphere, the right energy to get start-ups going.”

        Synchrony makes a Web-based relationship management system that allows companies to monitor customer contacts whether they're by phone, e-mail or chat. In two years, it's grown to 50 employees.

        “We just like the image and the culture and the environment that that area represents. It's conducive to highly creative younger people that are the labor pool we need to attract,” Mr. Richey said. “We also want to be around other companies like us, because there's a lot of energy that comes from that.”

        Ethos Interactive is the granddad of Main Street. It set up shop three years ago and is looking to expand. Co-owner Chris Evans said he's seeing the technology community come of age here.

        “When we started out, we were a little shop on Liberty Hill, and to connect with people in our industry, we had to go on the Internet, use e-mail, go to conferences,” he said.

        Now, he's finding cohorts here in town, and even former competitors are becoming collaborators. “There's so much work out there now there's not much competition,” he said. “Ed Estes (at Digital Bang) and I don't have to fight over jobs, because our plates are full.

        “What I see happening is far more collaboration than competition. There's so much you have to do to get a dot.com company off the ground and make it a success.”

        No one company can do it all, so the Main Street shops come together to form virtual corporations, staying together as long as it takes to complete a job, then moving off to other work.

On Digital Rhine
        For Pete Blackshaw, a native Californian, Main Street reminds him of Old Pasadena, an area where entrepreneurs combined “civic pride, economic development and historic preservation.” It's the home of idealab, an incubator that's spun off more than 20 Internet start-ups, including Citysearch and eToys.

        “There's no reason why a similar situation couldn't take place here,” on the street he's dubbed the Digital Rhine, he said.

        Project Bark combines Mr. Blackshaw's work as a consumer advocate in the California legislature, his Harvard MBA and his previous life in interactive media at P&G.

        He said he's finding the services Bark needs — from Web architecture to public relations — right here in town, which makes anything possible.

        “There are some that say you have to be close to your partners on Sand Hill Road (in Silicon Valley) or Silicon Alley. I'm saying you can do it just as easily in Cincinnati,” Mr. Blackshaw said.

        “And it's a lot cheaper here.”

        Bob Schneider owns four adjacent buildings on Main, home to watering holes Jefferson Hall, Westminster's and Japp's, and also home to Ethos and Up4Sale, an online auction site acquired earlier this year by Internet giant eBay Inc. for $70 million.

        The spaces, like their tenants, are a little off-kilter. The floors often aren't quite level, ancient wood is fastened to beams in odd configurations. The rooms are wide open, though, with eye-catching details. The lack of plumb walls opens what these folks like to call the creative environment.

        “For businesses like ours that want a creative environment, that doesn't want A class space ... it just fits,” Ethos' Mr. Evans said of Main Street.

        He said his real estate broker tried to steer him downtown, but he steered him up Main Street.

        “The neighborhood stands for diversity. It stands for different viewpoints. It jogs you out of your usual environment,” he said. “For a lot of companies, it's going to be a good place to be.”

        Mr. Schneider outfits all his tenants' spaces with kitchens so workers can eat while pulling all-nighters, showers and icemakers in the refrigerators.

        One entrepreneur didn't want to pay for the icemaker, but Mr. Schneider said it was free and insisted on installing it.

        Why is it so important? the guy asked.

        Mr. Schneider knew the guy hadn't thought about every detail of his future.

        “Aren't you going to have a party to celebrate your first million?” he said.

       



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