Most startups develop a proof of concept. The graphic-design startup Penji is a proof of concept. The founders' goal: to demonstrate that tech companies can thrive in Camden, New Jersey.

"Penji is the poster child that will be an example to other startups," says Penji co-founder Khai Tran. "Even in an underserved community, you can be very successful."

Once the nation's poorest city, Camden remains high on that dismal ranking, with roughly 37.4 percent of residents living below the poverty line, according to census data. Crime is down around 50 percent since the city replaced its entire police force with county officers five years ago. But the stigma--it was once the most dangerous city in America--and significant problems remain. 

A 2013 state program of tax breaks to attract large companies, heavily weighted toward Camden, landed big fish like American Water, Subaru, and the 76ers. But those corporate transplants generated relatively few jobs for locals--and those at great expense. "The real companies that are going to give jobs to students and residents are startups," says Tran. "They probably don't need tax credits to come here. They need cheap rent and some kind of startup ecosystem."

For two years, Tran and his business partners, Johnathan Grzybowski and Melissa Thi Le, have been trying to build that ecosystem almost from scratch. First, Tran and Grzybowski began hosting events and programs at the co-working space they occupied while operating separate businesses. When that co-working space--then the only one in Camden--closed, Tran started his own--Waterfront Lab--with help from Le. Around the same time, Tran launched Waterfront Ventures, an economic development organization working to attract 100 startups to Camden.

In October 2017, Waterfront Ventures hosted the first-ever major pitch competition in Camden, with a $25,000 first prize. Roughly 150 entrepreneurs--most of them from Philadelphia--applied for the event, held at Camden's Adventure Aquarium. Afterward, reporters interviewing Tran and Grzybowski asked whether they knew of successful startups in Camden that might draw others.

They could not name one. The tenants at Waterfront Lab--their own businesses included--were not the kinds of fast-growth tech companies that generate lots of jobs. In their experience, such companies did not exist in Camden. "The next day," says Grzybowski, "we launched Penji."

List the ingredients of a vibrant startup ecosystem--a skilled workforce, elite universities with robust tech transfer programs, pools of available capital, lifestyle amenities--Camden hasn't got them. Nor does it receive much government support, although that may change if Governor Philip Murphy's plan for a $500 million state startup fund--proposed in October--comes to fruition. Tran and Grzybowski believe the way to make Camden entrepreneurial is to act entrepreneurially. It's very early days. But slowly, from Camden's gritty pavements, something is sprouting.

From poverty to profits

Tran understands Camden's poverty because he lived it. In 1994, he emigrated here with eight family members from Vietnam. They worked sub-minimum-wage jobs, returning at night to a 300-square-foot basement on a street whose name they did not know because none spoke English. "My grandparents worked in a chicken factory 14 hours a day," says Tran. "My grandfather would come home with frostbite."

To pay his way through Rutgers, Tran freelanced as a web designer. Upon graduation, he expanded that business into what became Dino Enterprise, a highly profitable 15-employee company, based five miles away in Merchantville. The Waterfront initiatives have largely been funded with proceeds from that business.

Tran knew Grzybowski from high school; they had also attended the Camden campus of Rutgers together. After college, Grzybowski launched a marketing company called Pan Fried Media targeting restaurants. "I had only enough money in my bank account to last three months, and to survive I needed to eat," says Grzybowski. "If I was ever in a bind, I could barter my services for food."

Pan Fried morphed into Waterfront Media, a digital ad agency, and Grzybowski and Tran began sending each other clients. Following a partnership dispute, Tran closed Dino Enterprise to launch Owner's Magazine, an advertising-supported online resource for Millennial entrepreneurs in underserved communities. The two drifted apart, then found one another again at the co-working space Camden CoLab, a collaboration of Drexel and Rutgers.

CoLab, at that point, was largely vacant. Tran and Grzybowski talked to management about using the space for events and programming to gin up interest among potential entrepreneurs. Getting little traction, in May 2016 they hosted their own conference at CoLab. The speakers included Ted Mann, founder of the coupon-scanning company SnipSnap and now CEO of the public company Slyce; Nick Bayer, founder and CEO of Philadelphia-based coffee chain Saxbys; and Chad Stender, director of investments for the sports tech VC fund SeventySix Capital. More than 300 people came. "That is big for Camden," says Tran.

A hit and then a loss

The conference was meant to be a one-off. Just a few founders turned up at the event. The rest were students and residents, many of whom reached out to Tran and Grzybowski over the next weeks saying the conference had inspired them. They asked for more content about startups and, in some cases, introductions to the speakers.

Katrina Naidas was among the few practicing entrepreneurs at that first conference. Camden had little to offer her in 2015 when she launched LinkedNoodle, a platform matching people who want to acquire skills like cooking, dancing, and drawing with local teachers. The Waterfront events she's attended since have provided valuable contacts and information. "One of the best things has been the mentorship of entrepreneurs who might not have come from tech but have made their experiences relevant to what I'm doing," says Naidas. "And they've gotten the local politicians much more involved."

But just as Tran and Grzybowski opened their play, the theater disappeared. CoLab closed up shop. Worried that with no co-working space Camden would fall even further behind in its economic objectives, Tran partnered with Le--who had left a New York startup and offered her services for a year for free--to start Waterfront Lab. Waterfront Lab and Waterfront Ventures are the two pistons meant to power Camden's startup engine.

Tran explains Waterfront's three-to-five-year plan to make Camden a tasty destination for entrepreneurs. First he, Grzybowski, and Le will help others start additional co-working spaces that will host programming and conferences. (CoWork Street, a second space founded by another refugee from CoLab, opened shortly after Waterfront Ventures.)

Next they will create an accelerator comparable to Philly Startup Leaders, a successful program in the city across the bridge whose dynamic entrepreneurship scene the Waterfront team has studied. That accelerator will hopefully mint successful startups to join Penji in raising Camden's profile. Companies graduating from the accelerator will likely receive seed money from a venture fund backed by Waterfront Ventures, the city, and local institutions. "When we fund them, our stipulation is that you have to stay in the city and provide 50 percent of jobs to students and residents," says Tran.

Jeffrey Nash, a freeholder (the equivalent of a county commissioner) in Camden County, says Waterfront's projects build on revitalization that began in Camden with the influx of large companies five years ago. "What's exciting about Khai is he wants to bring in smart young people who have for the most part not started their lives yet," says Nash. "They will be buying their first houses and raising children here. And that is how you develop the future of the city."

A $1 offer lights the fire

By fall of 2017, Waterfront Lab had attracted 35 tenants for its 3,000-square-foot facility in a former bank building. Short on space, in April it terminated that lease and is hoping to move into 20,000 square feet on the sixth floor of City Hall. 

For now, Penji--with 10 employees in Camden and another 25 around the world--is squatting in an apartment in a luxury complex housed in the old Victor Talking Machine Company building. The founders chose that location because it is in a secure part of town. Camden's crime rate--though the lowest in decades--remains high. "Half of our team are women," says Tran. "We couldn't choose a place that was not 100 percent safe for them."

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For Penji to function as a floor model for other startups, Tran and Grzybowski needed it to take off quickly. The company provides clients with unlimited graphic design services from a single designated designer for $349 a month. To get the name out and do some good in the interim, the founders offered Camden-based nonprofits the same services for $1 a month.

Riding the publicity and goodwill the deal generated, Penji within less than a year attracted more than 400 customers, including corporate clients like Reebok, Harry & David, and 1-800-Flowers. Such customers typically retain multiple designers, at rates of up to $3,490 a month. Penji still serves 60 nonprofits. To avoid being scammed by faux do-gooders, Tran personally visits every organization that applies for the $1-a-month program.

Grzybowski says Penji plans to hire 100 students from Camden schools in the next few years. The company also collaborates with Hopeworks, a local nonprofit that trains struggling and traumatized youth in tech and life skills.

A dream of bustle

With Waterfront Lab hopefully operating out of City Hall or nearby, Tran and Grzybowski imagine new energy downtown, which is also home to the Rutgers campus and two other colleges. A new health and sciences center is under construction nearby with facilities for Rowan University's Cooper Medical School. And New Jersey Transit and PATCO rapid transit are upgrading facilities there. "It's becoming a hub of institutions offering education, and tech startups would be a natural progression," says freeholder Nash.

Still, at the moment, things are quiet. Downtown lacks the kind of restaurant-and-retail scene on which startups thrive. "Right now, businesses are hesitant to open shops in Camden because there is nothing here," says Tran. "Once we open our space and there are a lot of people walking the streets in addition to students, it becomes more enticing to open ground-level retail."

Red Queen Gaming, a four-person company that helps developers create tools like heat maps and battle calculators for use inside video games, is one startup planning to make Camden part of its future. The company moved to Waterfront Lab from Philadelphia, where it had found space in another startup's offices. Co-founder and CEO Alexander Gilbert says he was drawn by the Waterfront team's commitment to training underprivileged youth in coding, a mission Red Queen shares. The company is in Philadelphia while Waterfront Lab is in transition but wants to return.

"I love what Waterfront is doing and know whatever this next phase becomes will be amazing," says Gilbert. Although he expects to keep a footprint in Philadelphia, "Camden is right where we want to be."