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Obit: Silicon Alley Café Logs Out

Eureka Joe became the chic watering hole for the digerati of Manhattan. But after the Nasdaq meltdown, Eureka Joe's customers, as well as its owners, sunk into depression.
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Obits

The business: CafÉ frequented by the Internet crowd
Founded: 1993
Closed: December 2000
Cause of death: Owners' ennui

It seemed only fitting that Eureka Joe, a coffee shop identified with New York City's Silicon Alley, shut its doors for good last December. Hailed by Business 2.0 magazine as one of the nation's "new power centers," Eureka Joe had emerged as the place where the local dot-com set could settle into an easy chair, sip a latte, and parse a business plan. Just as the coffeehouse's rise had coincided with the ascendancy of its high-flying neighbors -- notably, iVillage.com and Double-Click -- the company's exit appeared to be linked to their downward trajectory.

The complete story turns out to be a good deal more nuanced. Actually, say Eureka Joe owners Jackie Himelhoch and David Pearlberg, the cafÉ did just fine last year. The gloom enveloping Silicon Alley was a secondary factor in their decision to fold their seven-year-old business. The main reason? "My partner and I kind of got bored," says Himelhoch.

Friends from college, Himelhoch (a former publicist) and Pearlberg (a former restaurant manager and chef) had opened Eureka Joe in 1993, when they were in their twenties. The blossoming of Internet-related businesses in the Flatiron District, the Manhattan neighborhood where the cafÉ was located, had come as a welcome but unexpected surprise.

As the Internet economy quickened, so did the pace of business in the environs of Eureka Joe, which was on Fifth Avenue between 21st and 22nd streets. Rents soared. Space was at a premium. Many dot-com workers flocked from their cramped offices to Eureka Joe's cavernous 4,000-square-foot lounge. The cafÉ crackled with "infectious" excitement, recalls Himelhoch.

About midway through last year, however, the cafÉ's owners became aware of "a change in the mood," as Pearlberg puts it. "That energy was just not there anymore," says Himelhoch. Sales slackened a bit, although for the year they totaled almost $2 million, up over 1999's sales, according to Himelhoch. In November, when the partners' landlord offered to buy out the three years left on their lease, Himelhoch and Pearlberg took stock. They concluded that they would rather do something other than operate a cafÉ.

For Himelhoch, 33, there's "definitely a tie-in" between the pall on Silicon Alley and her own waning enthusiasm for Eureka Joe. Not that she has given up on the dot-com world. She has signed on as an employee at DripCafe .com, an online dating service and brick-and-mortar cafÉ. And Pearlberg? He's working for a New York City jewelry designer. "We accomplished what we wanted" at Eureka Joe, says Pearlberg, 35. "We wanted to move on."


Where the Power Breakfast Lives

Buck's is to Silicon Valley what Eureka Joe was to Silicon Alley -- only more so. But Jamis MacNiven, who opened his storied restaurant in Woodside, Calif., nine years ago, told Inc. recently that he's undaunted by the collapse of dot-coms around him.

Inc.: How has the meltdown affected Buck's?

Macniven: I see a change in the mood, but business is better than ever.

Inc.: The Internet-economy slump hasn't affected your business?

Macniven: Right. Because, you see, the same people are still here. Nobody has moved out of town. And people are still eating. Buck's is still selling as many pancakes as ever.

Inc.: Are they still doing deals at Buck's or just eating?

Macniven: They're still doing deals. But the language has changed. A year ago people would say, "I've got an E-commerce idea; I've got a B2B or B2C." Those expressions are simply not used now. The first thing out of someone's mouth will be, "We're an enterprise company." They're anything but an Internet company.

Inc.: Are you bored at all?

Macniven: If somebody asked me what I would want to be doing other than this, well, other than being a movie mogul, this is it. This is the most fun in the world.


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