When Dolores Labs changed its name to CrowdFlower, it left behind a sprawling loft of an office, a hip logo, and a culture of innovation. A VC firm seized the opportunity.
When Dan Scholnick of Trinity Ventures was considering investing in San Francisco-based crowdsourcing start-up Dolores Labs, he laid one significant stipulation on the company's CEO, Lukas Biewald. "One of the first things we said to Luke is 'it's fine if you stay in the Mission District, but please find a less sketchy area," Scholnick says.
Dolores Labs was housed in a second-floor loft space on a Mission District alleyway perhaps best known for its broken vials and stench of urine. It was the sort of alley that would make you pause and rethink walking it after sunset. But Biewald explains that at the time office space downtown was too expensive. And lots of the staff lived in the Mission, so commuting to the South Bay seemed insane. So the little second-story office on an alleyway was the place the start-up grew from two to 10 employees; the place it created weekly Demo-Day-like project-presentation sessions; the place it decided to lend free space to an artist-in-residence. It was the place Dolores Labs earned its first $5 million in funding. (Yes, Trinity caved in on the request, and led Series A funding in 2009.)
Throughout that time, though, Dolores Labs was bursting at the seams. The team finally did as Trinity requested, and relocated to a nearby 4,500 square foot ground-floor location. The new office was wedged between Valencia Street and a spray-painted-mural laden alley, which was usually also embellished with a broken down pickup truck and the occasional slumbering homeless person. Inside, the office was decked with plants, mosaics, and a sketch of the company's logo—an alligator chomping on a Starlight Mint that Biewald haphazardly drew one day. Scholnick says he loved the new digs from Day One, though Biewald suspects it "still creeped out some of the people at Trinity."
Time was, investors raised eyebrows over companies founded in San Francisco rather than in quiet, safe Silicon Valley. But in recent years, San Francisco's SoMa neighborhood had seen a boom in consumer Internet start-ups. In the livelier Mission District, office space was more rare, but by 2010 companies such as Posterous and Typekit had launched there; Hipmunk was moving in. Mission coffeeshops were bursting with small teams working on start-ups—so much so that when Scholnick would drive up from Sandhill Road for meetings in San Francisco he was having trouble finding comfortable places to talk.
"I was spending more of my time in San Francisco, and my partners were spending more of their time in San Francisco," Scholnick says. "I just started taking a lot of meetings in the Dolores Labs office because it had such a good vibe that it gave everyone a good vibe about Trinity."
But the new Dolores Labs office was already growing crowded. Armed with that original $5 million in Series A funding, and bolstered by $7 million in Series B funding led by Harmony Venture Partners, the company outgrew its new space—on which it had a three-year lease—in just nine months.
In that same nine months, it had also outgrown its old brand. The company used to experiment with lots of different, and separately branded, crowdsourcing projects. But Dolores Labs found its fastest growth in the area of paying online individuals to complete small tasks, and selling the collective wisdom to other companies. In other words, it excelled at harnessing the crowd in the cloud.
"The name Dolores Labs started to feel too research-y for our customers," Biewald says. "We started getting bigger clients, and we felt like our name was holding us back, because it sounded like a research project. Dolores Labs worked for a hip young start-up, but it didn't work that well for a successful crowdsourcing enterprise."
Away went the Dolores Labs moniker, and with it the friendly mint-eating alligator that had served as the company's logo for the past three years. In came the name CrowdFlower, and a sleek logo, designed by longtime-employee Stephanie Geerlings. "The name is more friendly, so we wanted to make the logo as scientific as possible," Biewald says. "So we used a sleek font and added the sigma as the second 'O.'"
In early 2010, Biewald moved his growing staff at CrowdFlower to a third office in the Mission. It was then Scholnick and Trinity saw an opportunity. Scholnick decided to move himself—and anyone else who would join—in to the recently vacant 4,500 square foot office. He keeps desks open for his colleagues at Trinity, but leases most of the space to very early-stage companies who treat the office as something of a hybrid of a co-working space and an incubator. Each start-up, including MailRank, Colingo, IndexTank, and Card.io, rents tables or desks for $350 a month. Trinity subsidizes the rest of the cost of the space.
It's not unlike the idea behind Dogpatch Labs, a San Francisco office-rental-slash-incubator, which was founded and is subsidized by Polaris Ventures. Both setups can be seen as symptomatic of the fact venture capitalists want to be cozy with start-ups and the entrepreneurs working on them, but that it's a risky bet to invest too early. That's because investment implies continued support—and a start-up can seem lackluster if a VC firm that funds a Series A doesn't invest in following rounds.
Aside from renting space at a below-market cost, Scholnick is trying to add value for the start-ups that work out of the new Dolores Labs. He's trying to give them a vibrant, collaborative, and exciting atmosphere. In other words, he's attempting to tap exactly what Dolores Labs had done right.
"We're trying to just recreate the vibe—the sense of community, the creativity, and, frankly, some of the wacky stuff that made it a place people want to hang out," he says. So Scholnick and Trinity not only took over the space, but also furnishings, plants, responsibility for events, and, well, everything down to the Dolores Labs name and its funky logo.
"Yes, name is part of that; the alligator is part of that. Having an artist in residence, hosting Meetups at night, it's part of Dolores Labs," he says.
How does Biewald feel about having an entire brand he created co-opted?
"At first they were a little shy about asking to use it, but I was so flattered," Biewald says. "I had this brand I loved that was so tied to my style and my interests, and I was so cool with them wanting to reinvigorate the brand."
He was so delighted, in fact, he's handed over Dolores Labs's old Facebook and Twitter accounts—each with a healthy base of start-up oriented fans—and designed the fledgling incubator a website.
Dolores Labs the incubator is interested in getting newborn companies from idea to Series A. It hosts weekly all-member lunches, where individuals explain their progress and seek advice on technical problems they've encountered. Mike Mettler, a co-founder of Card.io, a mobile credit-card payment start-up, says his team has grown from two to four since working at Dolores Labs.
"Our favorite thing is that we are very productive here. Everybody gets along, we have our weekly lunches, and people go heads-down during the day," Mettler says. "But we have, like, Meetups at night."
And Scholnick says today, he still loves having meetings in Dolores Labs, and it's easier to convince his partners to leave Sandhill Road for a day in San Francisco. Entrepreneurs, too, are these days attracted to the location on Valencia Street. "A lot of the best software engineers live in the Mission—and it's easy access from the East Bay and South Bay," Scholnick says. "Plus, this neighborhood is just more active. It's more alive."
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