A Founder-led Greenhouse Where Startups Grow

With bare white walls, unpolished floorboards and a fire pole from the second to the ground floor, the small green house in downtown Kitchener feels more like a kid’s tree fort.

The orange glow of a small space heater fights the chill of the main floor, where simple trestle tables serve as desks. The parging on the walls, spread thick like peanut butter on toast, adds a flavour you won’t find in any grey cubicle-cluttered office.

But big dreams fill this little house, which sits on Oak Street facing the Tannery.

“The inspiration for it was ‘unfinished business’,” says Devon Galloway, co-founder and chief operating officer of Vidyard. “And that’s how we thought of Vidyard at the time…We had a long road ahead of us and [needed] a space that is super functional and reflecs that unfinished-business feel.”

Fresh from the University of Waterloo’s Velocity incubator program, Galloway and co-founder Michael Litt bought the house and occupied it with their team in September, 2012, once they finished renovations – if you can call it that. The work involved mostly demolition, not the typical addition of nice new floors and other fixtures.

They did, however, paint the outside walls in vivid Vidyard green, giving the house a nickname – greenhouse – that fits even better now, given what the house has since become.

After Vidyard outgrew it in seven short months, Galloway and Litt decided to keep it as a kind of halfway house for startups that, like theirs, had graduated from an accelerator or incubator, but weren’t ready to commit to a permanent space and all that goes with it.

“It’s kind of a serendipitous analogy,” Galloway says, “but we painted the house green and I guess it’s a greenhouse for startups.”

A team of 21 Vidyardians moved out of the house and into Vidyard’s current office in the Simpson Block on King Street last April. Their current neighbour just one floor below, Quantica (formerly Embium and Cyborg Trading), had a quick two-month stop in the house while they waited for their new offices to be completed.

The latest startup to enjoy the luck that seems to come with the greenhouse is Decision.io, whose team moved in earlier this year. Within two days of settling in, the team found out they had been accepted to a leading accelerator program in New York City, so they sublet the house to Velocity until they return.

While it has yet to produce a global giant, the greenhouse has the potential to parallel the famed office at 165 University Ave. in Palo Alto. It has been a launch pad for some of Silicon Valley’s greatest successes, including Google, PayPal and Logitech, just as they were just on verge of major momentum.

“The Tannery has already built some really great stories out of it, and now there is this expanded community around it,” Galloway says, explaining the value of transitional places like the greenhouse, which “give the community opportunities to succeed.”

It is more than just a piece of real estate for Galloway and Litt. Aside from feeling the emotional connection of it being Vidyard’s first independent home, they empathize with the challenges young companies face in finding space.

“Commercial real estate is ridiculously difficult, especially for a startup,” Galloway says. He attributes the problem to the uncertainty startups face when asked what they might look like in five years.

This makes traditional leases of three years and up a hard commitment to make for companies that are only on the cusp of something great, with no guarantees of success, especially not overnight.

At the same time, the right type of space is an important factor in a startup’s success once it is big enough to stand on its own. As a company grows, co-working space isn’t always conducive to the focus required to build to a billion dollars, but leaving behind the energy that comes with collaboration isn’t always advantageous, either.

“When you’re in that sweet spot of eight or 10 people, you want to be really focused nine-to-five with your co-workers,” Galloway says. “But it’s the after-hours and getting involved with the community that I still think has a lot of value, and a lot of that happens at the Tannery.”

That’s why the Oak Street house, just one block from the Tannery and visible from the Velocity Garage, made so much sense to Vidyard.

Aside from its bright shade of green, it stands out among downtown Kitchener’s growing number of startup spaces for the fact that its landlords are founders first.

“The terms are super flexible, and as founders, Mike and Devon understand the bare-bones nature of doing a startup,” says Jesse Guild, CEO and co-founder of Decision.io. “When we signed our lease, there weren’t a lot of terms; it was really clear, straightforward and pretty frictionless, the entire process.”

By no means is it luxury, but a first apartment rarely is.

“It’s a pretty minimalist environment, but that’s what startups are all about: being lean and trying to do as much as you can on minimal resources, and the environment is a reflection of that,” Guild says.

The proximity to the Tannery is hard to beat, but the direct line to Galloway and Litt as mentors is also attractive for startups looking to take the next step.

“When you’re mentored by companies that are only a few steps ahead of you, there is a lot of pragmatic advice that comes along with that,” Guild says. “They also understand the struggles that you’re in.”

There was an opportunity to sell the house last fall and at the time there were no tenants that occupied the space.

Although it was something to consider, Galloway and Litt have no intention to sell the greenhouse, but rather to continue to run it as a “rocking startup house” – a first home for early-stage companies.

“Right now, I’m sure there are thousands of entrepreneurs working out of bedrooms all over Kitchener-Waterloo. This is a natural evolution to that bedroom-like philosophy, with a crew of eight or 10 that need a house,” Galloway says.

“I do believe that a lot of the success of our company in this area is bred by the ecosystem as a whole,” he says. “And we’re willing to be a part of that in any way that we can.”

This article was originally published on Communitech, the Waterloo Region’s hub for the commercialization of innovative technologies.