How to Build a Successful Brick-and-Mortar Startup
Grow Your Business, Not Your Inbox
Online entrepreneurship is understandably all the rage, but for the many readers who still dream of opening that quaint cafe, launching a one-of-a-kind boutique or joining the increasingly popular co-working space market, this article is for you.
Jason Saltzman is the founder of Alley, a membership community offering private office space, co-working desks, meeting and conference room space, events and services for entrepreneurs. He launched the business in 2011 and now oversees more than 70,000 square feet of space at four New York locations. The company’s 150-plus membership includes founders and small business owners in various industries ranging from education, legal services, health, real estate, journalism, PR and legal services, to entertainment apparel, cosmetics and more.
A true serial entrepreneur from his teens, Saltzman went through about 40 different startup ideas, achieving success with a few, like SeamlessDocs, which works with governments to help digitize and automate their documents and document-processing procedures. He’s now on the advisory boards of several startups, including Javelin and Pijon, serves as a mentor for the startup accelerator Techstars and is currently a “Special Advisor for Entrepreneurship and Technology” for the U.S. State Department.
I sat down with Saltzman recently at one of the Alley locations to talk about how he bounced back from multiple failed ideas, and how he beat the odds and found lasting success with Alley. He shared his advice for other brick-and-mortar founders.
First, don’t let past failures hold you back.
Although Saltzman had achieved some success prior to Alley, most of his past startups failed. Many of the successful entrepreneurs I interview have multiple failures under their belts and, like Saltzman, consider them lessons -- not failures. His lessons helped him better understand and serve the ideal Alley market: fellow founders.
“[Failures] became ultimately lessons for me to grow this business and to also help people go through their failures and inspire them to just keep chugging along and to keep working on their products, regardless of what looks like a failure to everybody else,” he shared.
He added that you can’t succeed as an entrepreneur if you don’t learn to conquer the fear of failing, and failing repeatedly.
“Building a business is like a science experiment,” he explained. “If you're creating a formula, are you gonna be upset that you don't hit it right away? Are you gonna throw the test tube across the other side of the room and break the glass? You're not -- you're gonna look at it from an academic standpoint, you're gonna look at it as a science experiment, you're gonna keep putting these ingredients together until you get the formula right.”
Then make sure you (really, really) understand real estate.
Saltzman explained that if leases could swim, they’d be sharks, so find a great lawyer who is prepared to scour every line.
"[Look for any] ‘You didn't do this, gotcha!’ [terminology]. It's like, I didn't know if I didn't leave the door open it would terminate my lease.” He added that you really need to understand not only your market but real estate as a whole.
“Know what you're getting into . . . make sure you understand your profit margins. I know it sounds elementary to tell a business to do that, but especially when you have the tremendous amount of overhead as in a brick-and-mortar shop, understanding what your margins are, are crucial to running that business.”
Find the gap.
"Location, location, location!" is a saying for a reason. Part of Alley’s success is Satlzman’s eye for spotting an underserved community in New York’s bridge-and-tunnel crowd. While others were thinking, "Who wants to work near Times Square?" Saltzman was on the hunt for an investor who would also see the Midtown neighborhood’s potential.
“I knew the bridge-and-tunnel crowd . . . were working on interesting things and they wanted to be part of something bigger also. My thesis was just to open up space in Midtown and to see what happens.”
The bridge-and-tunnel crowd came through for Saltman and within 30 days, membership was completely full.
Saltzman’s first Alley investor was someone he’d already partnered with before.
“I think the easiest way to get investment on another project is going after an investor you made money for in the past, almost to a fault. And that investor was David Galanter, and he had the foresight to believe in me and to believe in the idea, and we went with it.” Saltzman added that Galanter is a commercial real estate attorney, which helped in securing a space and getting the idea off of the ground. Start where you are, with whom you know, because you probably have more valuable local connections than you think.
After getting Alley off the ground, Saltman saw an obvious opportunity with Entrepreneur Media, the owner of this site. Saltzman not only contributes to the site regularly, but works with its editors to find unique entrepreneurship stories within the walls of Alley. Not only could the members gain valuable media exposure, Entrepreneur gained access to real stories from the frontlines from founders who were “weeks away from not making their payroll. Or they want to celebrate their funding. Or they want to talk about how they need a co-founder because their last one, they just got into a fight with.”
“It was such a good idea that [Entrepreneur Media] not only became a strategic partner, they decided to invest in my last round of funding also, so they're not only a partner, they're one of my investors.”
Expect the unexpected.
In the opening week at the first Alley location, a pipe busted on a floor above the space and 18,000 gallons of water came crashing down through the ceilings. Try and proactively think through emergency situations and crisis management, he advised.
“What we learned from this obstacle is how to deal with that. How to deal with an emergency situation with 700 entrepreneurs that have to go out into the middle of the street and how to deal with the crisis management of the whole thing. That was a big eye opener, and there's a lot of that that happens.”
Differentiate yourself (by adding the most value).
Saltzman knew that meaningful connections, support and community are vital for entrepreneurs, and often hard to find. We’ve all been to a networking event filled with one too many over-eager consultants or sales reps, all wanting to get, get, get and sell, sell, sell. Those are not the kind of people you want to share a coworking space with.
“Anybody can work out of a WeWork. We really select the people that come in here. We really look at who you are, not who your investors are, not who your friends are but who are you and can we help you?” he said.
Alley is a membership community that offers its members a space to work, yes, but also exclusive events, an open, supportive environment, media attention and connections to mentors and investors.
“If you focus on creating the most value for your customers and you provide them the best experience possible . . . you're going stick out from your competitors. Competition motivates me to do that . . . . And by the way,” he added, “being in a competitive market means that you're in the right market. It wouldn't be competitive if there wasn't money to be made.” Clearly he chose well; WeWork now has an estimated worth of $16 billion.
Entrepreneurship is hard, and dealing with overhead, tricky leases and water leaks can make it much harder. Saltzman explained that the emotional and psychological “ups and downs and swings” of starting a business are the hardest thing to get through. He admits this answer is very meta, but when I asked him about his best advice for aspiring shop owners, he credited his success to having a like-minded community around him.
“I eat my own recipe,” he shared. “Having that support system of other people that are building startups has propelled me and helped me through some of the toughest times I've had.”
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