Editor’s note: Durham’s rebirth truly is a story of people, places and organizations. In day five of our “New Bull City” series, Jason Parker takes an in-depth look at the convergence of multiple factors – the fuel – that ignited the fire which remade Durham – and continues altering the city’s landscape today.
Buildings were rebuilt to accommodate new businesses, not tobacco.
New structures were added.
But the key ingredient is the people: The leaders, the university and the organizations who have provided the life blood to turn new and improved buildings into the sites for a new community.
The building of a new stadium for the Durham Bulls in 1994 helped light the fire. But the gutting and rebuilding of another structure – Brightleaf Square – also was crucial to turning tobacco town into tech town. Our story begins there.
DURHAM, N.C. – The Bright Leaf Historic District entered the National Register of Historic Places on December 30, 1999, just months after Liggett & Myers Tobacco Company shut down operations in its tobacco processing and manufacturing plants.
The Brightleaf Square buildings, which now house retail, restaurant and office space, are also former tobacco warehouses utilized by the American Tobacco Company managed by Washington Duke. The warehouses, built in the decade prior to the dissolution of American Tobacco due to a violation of the Sherman Anti-Trust Act (1911), were purchased by Liggett & Myers, which used them in their original function until 1970.
It took a decade to sell the buildings. In 1981, Brightleaf Square opened to the public. To many, Brightleaf Square was the first successful revitalization project from the deep history of tobacco in Durham.
Fifteen years ago, Brightleaf Square became a destination, said Jeff Clark, managing director of Aurora Funds, “but you wouldn’t go any further east.”
Some of Durham’s well-known restaurants opened in Brightleaf Square, including Satisfaction, one of Durham’s longest-standing pizza restaurants and bars, and famous Duke University hangout.
Slowly, the buildings attracted office tenants. The growth in this area, fueled by the mixed-use facilities, spread to the surrounding buildings. The renovated buildings, which retained some of the original architecture of the height of the tobacco era, attracted entrepreneurs.
Brightleaf attracted Fusion Ventures in 1999. Fusion Ventures was a small, $5 million venture fund that operated out of Brightleaf Square. According to local angel investor Bill Spruill, their four portfolio companies “melted down.”
With the failures of their companies, all of whom were based in Brightleaf, “the fund could not find additional partners and couldn’t raise additional money,” said Spruill. The fund filed for liquidation in February of 2002, according to Lee Weisbecker, a reporter at the Triangle Business Journal.
But a spark had been lit. Brightleaf could house entrepreneurs.
Joe Colopy and Chaz Felix, co-founders of Bronto Software, incubated their company in Brightleaf Square. Colopy, who moved the company to Meridian Parkway in Durham in 2002, remembered the company’s early days in Brightleaf when it came time to expand to a larger space in 2004.
“We looked in downtown Durham specifically,” said Colopy, “while we were at Brightleaf, we liked the feel, and we wanted to get back to it.”
Brightleaf Square also attracted Sue Harnett, founder and CEO of replay photos, who we profiled in this series as an emerging company on Wednesday.
“We moved in to our first office in Brightleaf Square in 2004,” said Harnett. The company hasn’t left the Bright Leaf Historic District since. “Brightleaf has been a cornerstone,” said Harnett, “and it’s been great to see it expand over time.”
The Bright Leaf Historic District also attracted Ogilvy, who renovated an office space on Main St. and Morgan St. That building later housed EvoApp, and currently houses ReverbNation.
“This space is perfect for us,” said ReverbNation CEO Mike Doernberg, who moved the company to the location in summer of 2012.
According to CED data, the Bright Leaf Historic District currently houses 19 early- and growth-stage startups. The district also houses bars, restaurants and retail shops that have become quite popular for Durham residents and for Duke students, and this was essential in bridging the gap between Durham and Duke in the early and mid 2000s.
Duke’s Durham Strategy
Duke University and Durham have been inexorably intertwined since Washington Duke and Julian S. Carr attracted Trinity College to Durham in 1892.
Duke, who offered the early funds for an endowment, and Carr, who had donated a significant portion of land (it is now East Campus), were both entrepreneurs who had considerable success in the tobacco business.
James B. Duke, Washington Duke’s son, endowed the university in 1924, and the university changed its name to honor Washington Duke.
“The relationship between Duke University and Durham’s entrepreneurial community is incredible,” said Sue Harnett, herself a Duke alumni.
Scott Selig, vice president of real estate at Duke University, came to Durham in 2001.
“Part of my charge was to make Durham more interesting,” said Selig, because for Duke to attract the best faculty and students, “we can’t just do it by having good research facilities and a good basketball team. People have to have something to do, something for their spouse to do, and things to do when they’re not on campus.”
To do this, Duke must play a key role in “helping to make downtown Durham more interesting,” said Selig. “Duke University is only as good as Durham,” said Selig, which is one of the key reasons that in the past twelve years, Duke has focused on shifting employees and university functions to downtown.
Duke University was the first organization to sign a letter of intent to move into a facility at American Tobacco Campus, said Selig. They were not the first to sign a lease (Duke was the fourth), nor were they the first organization to move in to the facility (that would be Bronto Software), however, their letter of intent allowed the developer of the project (Capitol Broadcasting) to leverage the Duke commitment to borrow money, attract additional tenants, and fill the space.
“We’ve taken that same concept,” said Selig, “to help make improvements throughout the city center.” In 2004, Duke University had 70,000 square feet of leased space, said Selig, compared to the one million square feet of leased space Duke expects to occupy at the end of 2013.
Duke University allows downtown developers to use Duke’s positive credit tenancy to build and complete infrastructure improvements that will benefit downtown, said Selig. Duke University may not be the reason a project starts, said Selig, but it can be the reason that a project “gets off the ground.”
“We did not and do not intentionally put Duke signs all over downtown,” said Selig, “we’re trying to help create downtown Durham, not downtown Duke.”
The goal is to create a livable, walkable city center, said Selig, that people enjoy and admire.
“We’ve been able to quietly help downtown naturally become what it was always going to become,” said Selig, “which is a really unique and interesting environment.”
“We have the creative, entrepreneurial spirit all over the city,” said Selig, “which is what allows us to help catalyze development.”
In the future, Duke will “change the types of tenants we house in downtown Durham,” said Selig, rather than continue to expand the square footage Duke University currently occupies. Duke is now focused on enhancing the scientific community, and moving researchers and laboratories to downtown.
Think about Kendall Square in Boston, said Selig, where universities moved their research facilities off their campuses and allowed the private sector to grow alongside of their research buildings.
Downtown Durham is actually one step ahead, said Selig, because the supplemental infrastructure – the restaurants, the entertainment venues, the retail shops – are already in place due to the increase in downtown office space.
“We’ve passed the tipping point,” said Selig, “Durham isn’t trying to find its cool – Durham is the definition of cool.”
Durham has noticed. Developers of major revitalization projects have noticed. And, as Selig predicted, developers leveraged Duke’s commitment to downtown in order to build a fascinating infrastructure, one that is extremely friendly to entrepreneurs.
“Without Duke University, American Tobacco can’t happen,” said Michael Goodmon, vice president of real estate for Capitol Broadcasting Company, developer of American Tobacco Campus, which now fills a central role in the American Tobacco Historic District and downtown Durham at large.
“Duke was in from the get go,” said Goodmon, “and their commitment was the linchpin to making American Tobacco work.”
Furthermore, said Goodmon, “their continued commitment and desire to be a part of the renaissance of downtown and be a part of the entrepreneurial effort is impactful.”
“They’re our greatest partner, and our greatest collaborator,” said Goodmon, “Duke is Durham, and Durham is Duke.”
“That is the story.”
American Tobacco Campus & American Underground
“There’s going to be one million new people in the region in the next 15 years. One million new people,” said Goodmon, “where do you think these jobs are going to come from?”
They’ll be created by our entrepreneurs, said Goodmon, referencing statistics that suggest approximately 80% of new jobs are created by small businesses.
“This was the whole concept here,” said Goodmon, referring to American Tobacco Campus and the American Underground.
The American Underground is a project that utilizes the old basement space of the former tobacco warehouses. It houses early-stage entrepreneurs and four critical support organizations that feed the entrepreneurial economy.
“We had this novel idea – of creating space for entrepreneurs to share,” said Goodmon, grinning as he added, “and it’s not that novel, by the way.”
“And when we created it, got a few great organizations in there, we had this feeling that we had something in our hands that made a lot of sense. First, it was just, “hey, we have a basement, let’s put some entrepreneurs in it, have some fun with it, and see what happens.”
The created shared space would create density, said Goodmon, and a “centralized location where individuals and professionals would gather.”
The project launched in 2009.
“It started with three groups,” said Goodmon, who served as anchor tenants for the Underground. They were CED, LaunchBox Digital and Joystick Labs. NC IDEA and IDEA Fund Partners followed closely behind.
Boosting Startup Businesses
And so did entrepreneurs, who wanted affordable, centralized space, and to be involved with a community of other entrepreneurs.
“Clearly LaunchBox didn’t make it past the first year, and neither did Joystick,” said Goodmon, with a faint look of disappointment. “But what I think we got coming out of the other side is even more impressive.” Goodmon pivots to discuss a new accelerator that is housed in the American Underground, Triangle Startup Factory, headed by Chris Heivly and Dave Neal.
“What Chris Heivly has been able to do is frankly pretty amazing. That is a southeastern powerhouse of an accelerator program, and still in its infancy, too. It’s only going to get better.”
Groundwork Labs, the incubator that followed Joystick Labs in the American Underground space, was designed to fill the space “in between” early-stage companies that qualify for NC IDEA grants and an accelerator program like Triangle Startup Factory, said Goodmon.
“We wanted this in-between step between a company in its infancy and a company in prime time. So, we said, what if we created a free accelerator program?”
“It’s been a spectacular program to have, really,” said Goodmon, enthusiastically. “I was worried, really, with LaunchBox and Joystick, and when we knew that was all coming down, but what has come out of the other side has been far more than we ever expected.”
CED: 30 Years of Supporting Entrepreneurs
“We started thinking about moving to American Tobacco in 2009,” said Joan Siefert Rose, president of CED, “because there was a lot of energy there.”
Rose, who prior to stepping in as CED president served as the general manager for WUNC, was already familiar with the American Tobacco Campus. She had opened up a branch of WUNC at American Tobacco in 2006.
“Once the idea gelled,” said Rose, speaking about the American Underground, “it happened very quickly.”
CED, the Council for Entrepreneurial Development, has served entrepreneurs in the region for nearly 30 years (Author’s Note: I am a former CED staff member). When Rose took the helm, the entrepreneurial support organization was based just outside of Research Triangle Park on Alston Avenue, said Rose.
“The American Underground was quite intentional in reaching out to support groups and companies that would be leaders,” said Rose, commenting on the initial design and tenants at the Underground.
“There was a sense that there was not a center of gravity for entrepreneurship,” said Rose, and American Underground offered a chance “to have an address for early-stage companies and for startups.”
With the move to American Tobacco, said Rose, “our network came with us.”
“I think we brought credibility and infrastructure with us,” said Rose, who admitted there was a strong degree of luck involved in the move. “There was really no guarantee that Durham was going to become what it has become, though the energy was there,” said Rose.
CED, historically, has organized the network and served as the center of the startup community in the region, said Rose. In the near future, said Rose, “CED will move into a role of convening the major players.”
CED will celebrate its 30th birthday in January of 2014. “We’re going to use the power of the community,” said Rose, “there’s a bigger role we can play now.”
From the Ashes of LaunchBox and Joystick
Deep in the Underground, across the hall from NC IDEA, a critical organization that funds early-stage entrepreneurs through grant funding, is a large, communal space frequently occupied by entrepreneurs.
There are small signs on the tables in the bullpen, and a series of offices with whiteboard paint, brainstormed ideas, and young entrepreneurs on cell phones closing deals.
This space used to house LaunchBox Digital and Joystick Labs, two organizations that could not raise funding after their pilot programs.
The phoenix that rose from LaunchBox Digital’s ashes is Chris Heivly’s Triangle Startup Factory, a powerhouse accelerator in the midst of its fourth session, which accepts 5 to 7 entrepreneurial teams.
These teams sit alongside founders of companies that have been invited to participate in Groundwork Labs, a “pre-accelerator program” managed by John Austin.
Groundwork Labs is the phoenix that rose from Joystick’s ashes. The idea was to provide an opportunity to companies that are in their very early stages, to help prepare them for a Triangle Startup Factory or a NC IDEA grant.
“Purpose of the NC IDEA grant program is to give two or three folks a $50,000 injection,” said Austin. “What about the company that had the 48th best application?”
“Could we help them with an accelerator-type program?” said Austin. There’s a graph that Austin shows when he talks about the growth trajectory for startups in the Triangle.
Groundwork Labs fits companies that aren’t yet ready for an NC IDEA grant or to participate in an accelerator. Yet, the “pre-accelerator program” does provide basic support for entrepreneurs, including work space.
The “goal of Groundwork Labs is to help 25 companies per year,” said Austin, “and we’re on track.”
Durham’s Unconventional Chamber of Commerce
Casey Steinbacher, president and CEO of the Greater Durham Chamber of Commerce, first moved to Durham in October of 2007.
“The physical revitalization of Durham was already underway,” said Steinbacher, of her impressions of Durham at the time. “American Tobacco was completed, the ballpark was done, and the Durham Performing Arts Center, DPAC, was almost done.”
While infrastructure was changing, said Steinbacher, “we were trying to figure out where the business climate of downtown Durham really was.”
Steinbacher jumped in to action, quickly meeting business owners in downtown and speaking with community leaders.
“We came across a number of technology startups,” said Steinbacher, “all of whom were under the radar screen.”
With this in mind, said Steinbacher, “we made a very conscious decision to get connected to the entrepreneurial community, and to make it an important part of the downtown culture.”
It made perfect sense, said Steinbacher, “because Durham had all of these great affordable and available spaces,” which attracted entrepreneurs.
“It’s also important to understand that this was an incredibly difficult task, especially from a Chamber’s perspective,” said Steinbacher, which typically operate with a “command and control” attitude. Entrepreneurial growth, said Steinbacher, particularly in an urban environment, grows organically.
“Philosophically, it was our job to be intentional in helping keep the ecosystem around entrepreneurs populated with what they needed to allow entrepreneurs and their companies to grow organically,” said Steinbacher, “which is not a Chamber would normally do.”
Under Steinbacher’s guidance, the Chamber launched an aggressive branding campaign and a national incubator program, the Startup Stampede.
Adam Klein, who is now the chief strategist for the American Underground, ran the initiative, which brought 37 startups from around the nation to downtown Durham.
Nearly 20 of those companies remain in Durham today.
Klein, with help from Matthew Coppedge and Downtown Durham, Inc., also designed the Smoffice, the world’s smallest office, a project that recently won the world’s most unconventional economic development project award at the World Chambers Congress in Doha, Qatar.
The Smoffice was a national competition that awarded office and residential space to one company – The Makery – in downtown Durham. It was the only U.S. project named a finalist for the award, and the first U.S. Chamber to win the honor in the 16 years it has been awarded.
Projects like these have elevated Durham to fame, amidst the backdrop of Durham’s growing entrepreneurial economy, said Klein.
“I feel like we’re at this point in Durham where we’ve moved on from being an unrecognized player in the startup scene,” said Klein, “and now we’ve got to be a really strong emerging market for startups.”
How does Durham elevate to be mentioned in the same breath as a Boston, a Boulder, or an Austin?
“Durham has attracted a group of very creative individuals, who, while different, can rally around common values,” said Klein.
“And that’s one of the things we’ve got to maintain going forward,” said Klein, “if it is maintained, I don’t worry about us. I don’t worry that success will take us off the rails and make us an uninteresting city.”
Next: We study the culture of Durham, and we revisit conversations with those entrepreneurs and creative professionals that we’ve interviewed in our series, “The New Bull City.”