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DealBook: Technology Start-Ups Take Root in Berlin

April 29, 2013 by Leave a Comment

BERLIN — Near the Rosenthaler Platz subway station here, signs of the city’s high-tech future blend seamlessly with its communist past.

Decrepit breweries and stables have been converted to communal offices decked out in colorful Ikea furniture. Achingly cool coffee shops with names like Betahaus and St. Oberholz are packed with programmers in their 20s and 30s hunched over shiny new laptops. And even as the city’s unemployment broadly remains high, vintage clothing stores selling patent-leather Dr. Martens boots for 180 euros, or $235, entice technology transplants from across Europe with promotions in English.

“I got sucked into Berlin,” said Henrik Berggren, a Swedish college dropout who moved here in 2011 to work on his e-book venture, ReadMill. “It became clear that this was the place to be.”

More than two decades after the fall of the Berlin Wall, the German capital has gone from a cold war relic to one of the fastest-growing start-up communities. Engineers and designers have flooded into Berlin in recent years, attracted by the underground music scene, cutting-edge art galleries, stylish bars and low rent.

Hours after landing at Tegel airport, Mr. Berggren, a bearded 33-year-old computer programmer, found an apartment with two 20-something Germans in one of the city’s trendiest neighborhoods for just 300 euros, or $390, a month. A few days later, he secured a cheap office for his four-person team, a space they shared with several other start-ups.

With the new wave of entrepreneurs, Berlin, once viewed as the poor relation to Germany’s main business centers, like Frankfurt and Hamburg, is improving its ranking in the country’s economic hierarchy.

In March, the country’s chancellor, Angela Merkel, toured several local technology firms in a show of support. The city’s politicians also are trying to make it easier for international workers to get visas by fast-tracking applications from technology professionals and other workers.

“The scene is very young,” said Alex Ljung, the co-founder of SoundCloud, a music Web site backed by the American venture capital giant Kleiner Perkins Caufield Byers. “Berlin isn’t proven yet. It’s much like a start-up in that way.”

By Silicon Valley standards, Berlin is still a backwater.

Entrepreneurs say high-quality programmers and engineers are hard to find, and a lack of early-stage funding from venture capital firms, particularly those in Europe, has hampered companies’ growth. After getting burned by the dot-com bust, German venture capitalists have largely shied away from making big investments, preferring to finance early-stage companies with checks of less than $2 million.

The city also is trying to overcome its reputation for copying American business models rather than developing innovative ideas.

The Samwer brothers, whose Berlin start-up incubator Rocket Internet has completed a series of successful deals, sold German versions of eBay and Groupon to their more famous competitors. The brothers — Alexander, Oliver and Marc — have used the proceeds to invest in companies like Facebook and Zynga. One of their latest projects, a German rival to the online retailer Zappos, is valued at $3.7 billion.

“Previous generations of Berlin start-ups were copycats,” said Matt Cohler, a partner at the venture firm Benchmark Capital, who was one of the first employees at both LinkedIn and Facebook, and has invested in a Berlin start-up. “It was the predominant playbook.”

More important, there have been few successful exits — sales to larger companies or lucrative initial public offerings — that could cement Berlin’s place in the global start-up community. Among those deals, few break the $1 billion mark.

In 2010, Groupon bought the European rival CityDeal for around $260 million. Google acquired DailyDeal, a similar daily deals Web site from Berlin, for a reported $200 million in 2011; earlier this year, the Internet giant sold the start-up back to its founders.

“Many funds got started at the wrong time,” said Christophe Maire, an angel investor in Berlin, whose nickname is the Conductor because he has mentored, and invested in, many of the city’s new generation of young entrepreneurs.

“There’s a reluctance to back innovation.”

But as local start-ups gain global audiences — and international backing — entrepreneurs and investors are betting on Berlin. While venture capital investment in the rest of Europe has remained flat since the financial crisis began, the city attracted 173 million euros ($226 million) in venture funding last year, a 164 percent increase compared with 2009.

Big technology companies are showing interest, too. Earlier this month, the Japanese technology giant Panasonic bought Aupeo, a local audio streaming service, for an undisclosed amount. Google has invested in a local start-up hub called the Factory that is being built at a site that once was part of the Berlin Wall.

“There are billion-dollar companies just waiting to happen,” said Ciaran O’Leary, a partner in the local venture firm Early Bird, in his minimalist office in the center of the city. “Something big is going to happen. It’s just a question of time.”

Ijad Madisch knows the limits of starting a technology company in Germany.

Mr. Madisch, a Harvard-educated medical doctor, also holds a Ph.D. in virology and has studied computer science. Yet when he started working on Research Gate, a social networking site that allows scientists to share work and collaborate on projects, he faced resistance.

Returning to Hanover to be closer to his family in 2008, Mr. Madisch’s college supervisor told him to give up his pet project after he asked to work part time to focus on the start-up.

The next day, Mr. Madisch, 32, quit his job. He soon transferred to Harvard where a former boss was happy to let him work fewer hours while he pursued his business idea. Friends also put him in contact with blue-chip American venture firms, including Benchmark Capital and Accel Partners.

After securing early-stage fund-raising from West Coast backers, Mr. Madisch moved Research Gate from Boston to Berlin in 2011, and has expanded his staff tenfold in less than two years, to 120 employees. The site now connects more than 2.6 million scientists worldwide, and Mr. Madisch plans to make money by selling advertisements for academic conferences and job openings.

In an ironic twist, Mr. Madisch’s former boss, who had warned him against starting the company, is now one of the site’s most active users.

“I had to leave Germany to get back to Germany,” Mr. Madisch said in his three-floor office in central Berlin that has a large game room and sleeping pods to keep programmers fresh.

“German venture capitalists had this idea in front of them, and they didn’t do anything about it.”

For entrepreneurs, Berlin offers the infrastructure, without the costly overhead of Northern California, New York or London. Commercial rents in the once-communist side of the city are about half of that in London, allowing entrepreneurs to stretch their start-up budgets.

Three years ago, the founders of EyeEm, a mobile photo app similar to Instagram, borrowed an art gallery in a chic part of Berlin to start a global online photography competition. The showcase received more than 2,000 entries from around the world and formed the basis of their business idea.

EyeEm later replicated the exhibition in SoHo. But costs quickly rose as the founders had to fork over high rent for a trendy gallery, submit multiple forms to receive licensing permits and pay high wages to waiters and security staff.

“The cheap rent Berlin buys you time, and time is everything,” said Lorenz Aschoff, a co-founder of EyeEm, in the company’s converted loft space. “If we hadn’t received the original gallery for free, it would have killed the idea before it took off.”

As start-ups in the German capital become more established, entrepreneurs and investors alike are hoping that one of the city’s companies will turn the growing interest in Berlin into cash.

Many eyes have focused on Wooga, an online game start-up founded in 2009 that competes with Zynga for users on mobile phones and social networking sites like Facebook.

At a converted bakery colorfully adorned with characters from Wooga’s games, the company’s 250 employees from more than 35 countries busily plan their next online game.

After raising money from both European and American venture firms, Jens Begemann, Wooga’s co-founder and chief executive, said investors are slowly reconsidering untested ideas. He is focused on beefing up its games for smartphones in an effort to diversify away from sites like Facebook.

“Gaming involves combining skilled engineering with a creative atmosphere,” said Mr. Begemann, 36, in the start-up’s five-story office where programmers share ideas in an open-plan kitchen that has been designed to look like a leafy forest. “Wooga couldn’t exist in any city other than Berlin.”

Article source: http://dealbook.nytimes.com/2013/04/29/technology-start-ups-take-root-in-berlin/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Case Study: Bakery Owner Talks About Coping With Health Insurance Changes

March 27, 2013 by Leave a Comment

Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.Sandy Huffaker for The New York Times Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.

Case Study

What would you do with this business?

Last week, we published a case study about Baked in the Sun, a wholesale bakery and distributor that is trying to decide how best to comply with the Affordable Care Act. Starting in January, the new law requires businesses with 50 or more full-time employees to offer health insurance or pay a penalty. Owned by Rachel Shein and Steve Pilarski, husband and wife, the company employs nearly 100 workers to bake and deliver freshly made pastries to coffee shops, hospitals and hotels in Southern California.

Baked in the Sun has offered health insurance to its employees in the past but many are young and healthy and have preferred to keep more money in their paycheck, rather than contribute to a health plan. Soon, though, almost all workers will have to carry health insurance — through their employer, a government exchange or other source — or pay a penalty. And, as the case study discussed, Ms. Shein and Mr. Pilaski are trying to decide whether they will offer health insurance, pay a penalty or outsource enough work that they can reduce their head count below 50 and be exempt from the law.

The article elicited lots of comments and strong opinions, as well as reports in other media outlets, including CNBC, which included Ms. Shein in a panel discussion about her company’s situation. Some readers argued that Baked in the Sun has a moral obligation to offer coverage. Others argued for a single-payer system that would allow owners to stop worrying about health insurance and focus on running their businesses.

Andrew Greenblatt, a senior vice president at Benestream, which helps low wage employees apply for government benefits, pointed out that under the Affordable Care Act, Medicaid has been expanded to cover families earning up to 138 percent of the poverty level, which means that workers who make minimum wage, especially single parents, may qualify.

And Alan Cohen, chief strategy officer for Liazon, a private insurance exchange for companies, suggested in a comment that many employees will be better off if the bakery chooses not to offer insurance and instead pays the government penalty. That’s because the employees would be likely to qualify for a subsidy at a government exchange that would allow them to insure their whole family — but only if their employer does not offer health insurance.

Of course, because neither the minimum level of coverage, nor the costs to all the insurance options have been finalized, lots of uncertainty remains. We contacted Ms. Shein for a follow-up conversation that has been condensed and edited.

A number of readers suspect that you are underestimating how much it would actually cost to insure your employees. Have you taken another look?

The insurance plans are still under development. My broker recently found one that was less than what I had found, but I’m not sure anyone knows what the final rules and prices will be.

Have you thought any further about how many of your employees will actually sign up for insurance if you offer it?

In the short run, when the individual penalty is low, there might not be much participation. We plan to have a meeting with our employees to see what kind of insurance they might want and which of them might be covered elsewhere.

Did this discussion have any impact on your thinking about whether you will pay the penalty or offer insurance?

The employees will all have access to health insurance whether we provide it, or we pay the penalty and they purchase it using a subsidy on the government exchange. We need to look at all the costs and tax implications and do whichever is least expensive for the business.

Are there any reader questions you want to answer?

Some readers claimed it was a moral imperative to provide insurance — but all employees will have insurance under the law.

Some readers thought your profit margin was too low and questioned how well your business was doing. What was your reaction?

Like many entrepreneurs we have great years where we can take vacations and put money into our kids’ college funds. Some years are leaner.

Do you think your customers would pay a few more cents for your baked goods — especially if it allows you to offer your employees health insurance?

Our products are unbranded and sold in hundreds of outlets so it would be hard to educate consumers about our employment practices. And the popularity of Wal-Mart shows that most consumers just want the best price.

You suggested in the article that you might have to raise your prices 4 percent to cover the cost of providing health insurance. But 4 percent of $8 million — your annual revenue — is $320,000. That’s a lot more than you estimated the cost of insurance. Couldn’t you just raise your prices 2 percent?

Yes, a 2- to 3-percent increase could cover the costs, but it’s a low margin business and pennies matter so we like to build in some buffer.

Would you favor a single-payer system?

I am in favor of a system that doesn’t penalize a business for being successful and able to hire more than 50 people and doesn’t deter us from wanting to grow. I am in favor of a system where everyone pays in, and everyone is covered. If that is a single-payer system, I’m for that.

Article source: http://boss.blogs.nytimes.com/2013/03/26/bakery-owner-talks-about-coping-with-health-insurance-changes/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

Case Study: Questions Abound in Learning to Adjust to Health Care Overhaul

March 21, 2013 by Leave a Comment

THE CHALLENGE The company is one of thousands of small businesses that employ more than 50 full-time employees and thus will be required to offer health insurance to their workers — or pay into a government fund — beginning Jan. 1. Rachel Shein and Steve Pilarski, the married owners of the bakery, which employs 95 people, estimate this could cost their business up to $108,000, and they are weighing their options as the date approaches. “Our revenues are about $8 million, but the food business is a low-margin industry so cutting $108,000 out of our profits, which are just over $200,000, is a big deal,” said Ms. Shein, who is the chief executive. They are evaluating different ways to comply with the new law and finance the expense.

THE BACKGROUND Ms. Shein and Mr. Pilarski bought their first bakery, a maker of scones, 16 years ago. Their business grew along with the popularity of coffee shops, and they expanded their product line to include other pastries.

During the recession, the coffee shop business contracted, so they found new customers among hotels and hospitals, but the cost of servicing different types of businesses and developing new products to meet their needs eroded profits. At the same time, gasoline and ingredient prices went up and vendors tightened payment terms. Still, the couple persevered by providing an array of freshly baked goods and offering product variety and consolidated delivery, simplifying things for their customers.

With the recession behind them, Ms. Shein and Mr. Pilarski are trying to rebuild their profitability. Baked in the Sun produces nearly 200,000 items a day — almost 200 different products, including brownies, coffee cakes, muffins and cookies — in an 18,500-square-foot baking facility in San Marcos, Calif. The goods are delivered to coffee shops, schools, hotels and hospitals in the San Diego area.

THE OPTIONS Ms. Shein is contemplating several options to comply with the Affordable Care Act’s business mandate.

Option One is to provide the insurance. According to the law, Ms. Shein will have to offer health insurance or, most likely, pay a penalty, and she estimates the insurance will cost up to $108,000 a year for 90 employees (managers have insurance already).

This is just an estimate, she said, because the insurance companies have not yet created and set a price on plans that meet the law’s requirement for minimum care. She estimates a cost of $200 per employee a month, of which the bakery would pay half and the employee would pay half. Employees can choose not to participate in the plan if they are covered elsewhere or for other reasons, so it is unlikely they will all sign up.

Option Two is to not offer health insurance and let employees find coverage elsewhere, perhaps on one of the new government exchanges. Under this option, the company will probably have to pay the mandated “employer shared responsibility payment” to the government.

The cost to the business would be $2,000 per employee a year, but the law exempts the first 30 employees, so the total would be $130,000 per year for a 95-person company. One benefit of this option is that the company would not have to take on the burden or expense of managing the insurance plan, which Ms. Shein estimates would take $10,000 of staff time.

One way to cover the costs associated with the new law would be to raise the price of each item sold about 4 percent and pass the costs along to buyers. “It’s ironic that our success meant we could grow,” Ms. Shein said, “and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don’t have the financial burden of health insurance.” Prices are currently similar among local competitors, Ms. Shein said, and she says she believes the increase in her prices could affect her sales, possibly significantly.

Ms. Shein is considering a third option: outsourcing certain jobs to reduce the staff, because businesses with 50 or fewer employees will be exempt from the penalty. “We can outsource the cleaning and make the drivers independent contractors,” she said, “and we can cut the least profitable delivery routes, least profitable accounts or reduce the variety of items we create.”

Article source: http://www.nytimes.com/2013/03/21/business/smallbusiness/a-bakery-with-95-employees-confronts-the-new-health-care-law.html?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

Frequent Flier: The Military Mind’s Take on Civilian Flights

December 27, 2011 by Leave a Comment

I’m a former infantry officer, and I’ve had a number of scary military flights. But when I’m on a civilian flight, I don’t even think about what can go wrong. I have a lot of respect for pilots and aviation, so I just sit back and relax.

I did experience a really horrible landing one time on a commercial plane. People let out audible screams when we hit the runway. When we were getting off the plane, I was walking behind this elderly woman. The captain was in the cockpit door and she looked at him and asked if we crashed or if we landed. I thought it was the funniest thing I ever heard. He didn’t.

But as a military guy, I do find myself scanning the crowd, looking for unusual behavior. Fortunately, I haven’t seen anyone who put me on high alert.

I don’t like to talk to seatmates that much. One time when I was single I was seated next to the current Miss New Hampshire. I thought it was great. I was chatting away, and getting absolutely nowhere with her. So I convinced myself that people just don’t like to talk on a plane.

I am really aware of the attitude of the flight crew, and I like to commend them when they are doing a great job. A few months ago, I saw an attendant cleaning up after passengers as we were exiting. I told her she did her job really well. She gave me a huge smile and said she wished she could hear that more.

My wife and I got into a habit several years ago of handing out gift cards for coffee shops or restaurants to homeless people.

Now I always carry some coffee shop gift cards and give them to people I think have provided great customer service. I’ve given some to people at the airline counter who have spent a lot of time and effort trying to reroute a flight, or even if they just spend an extra few minutes making sure there isn’t a flight that can get me to a place earlier. A $5 or $10 gift card for a cup of coffee and some snacks isn’t going to break me, and it makes someone else feel appreciated. Everyone is in such a hurry, we spend too little time trying to be nice to one another.

I did find a way to amuse myself on a plane.

I graduated from West Point, and built semiconductors for about two years. I love mechanics and figuring out how things work. When the new toilets starting going into planes about five or 10 years ago, I couldn’t believe how much suction they have. So I devised this little experiment where I take the roll of toilet paper off the spinner, hold it above the toilet, leaving some paper hanging down.

When the toilet flushes, it sucks about half a roll off. It’s stupid, I know. But it fascinates me. My colleagues don’t know I do this, but I guess now they will. And in keeping with the spirit of being nice, I always make sure there is another roll available.

By Dave Alberga, as told to Joan Raymond. E-mail: joan.raymond@nytimes.com.

By Dave Alberga, as told to Joan Raymond. E-mail: joan.raymond@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=001515adc59776994a5cfad22b934886

Filed Under: Business News Tagged With: , ,

Square Feet: Fresh, Local and Upscale, Coffee Spots Multiply in New York

October 12, 2011 by Leave a Comment

Small coffee chains, benefiting from lower retail rents and a seemingly bottomless thirst for high-end coffee even in a weak economy, are seizing the opportunity to expand in New York City.

“It’s crazy how many people are opening coffee shops in the city,” said Caroline Bell, a co-owner with her husband, Chris Timbrell, of Café Grumpy, which recently opened its fourth location, at 13 Essex Street on the Lower East Side.

Among the other homegrown operations are Ninth Street Espresso, with three Manhattan locations; Roasting Plant, with two cafes; Jack’s Stir Brew, also with two Manhattan locations; Gregory’s Coffee, with four coffee shops; Think Coffee, also with four; and MUD, which started as a coffee truck but has now started opening what it calls MUDspots.

Café Grumpy opened its first coffee shop and roastery at 193 Meserole Avenue in Greenpoint, Brooklyn, in 2005 when “it was like tumbleweeds going down the street,” Ms. Bell said. They chose the location because they lived there, but also because the landlord was willing to take a risk on a new food business.

“It’s a lot easier now,” having proved to be a viable business, she said, which has enabled Café Grumpy to expand into Manhattan, where it also has a shop in Chelsea.

Blue Bottle Coffee, a San Francisco roaster and brewer, opened its first New York cafe in Williamsburg, Brooklyn, in March 2010. “It’s a good time to be in coffee,” said James Freeman, the owner of Blue Bottle. “Especially Manhattan is really awakening to some more careful roasting, and interesting flavors and a more professional cadre of baristas making their drinks.”

Blue Bottle, which started as a street cart serving coffee at farmers markets in 2002, is in the process of fitting out two other cafes in New York: one at Rockefeller Center and the other at 450 15th Street in Chelsea. Mr. Freeman said he expects them to open by the end of this year.

Other chains that started elsewhere but are now venturing into the city include Stumptown Coffee Roasters of Portland, Ore., with a cafe in Manhattan and a brew bar in Red Hook (currently closed for remodeling); and Intelligentsia Coffee of Chicago, which has its “New York Lab” in Manhattan.

Real estate brokers say that coffee shops need a high volume of customers to be viable, which is why many are aimed at commuters in office neighborhoods. The addition of other products, like baked goods or a variety of drinks or packaged coffee beans and other accoutrements, can help keep coffee shops going in commercial neighborhoods as well as in residential neighborhoods, where retail rents may be lower, but so is traffic.

Much of the recent growth in the high-end coffee market in New York can be traced to Starbucks. New Yorkers were warming to the idea of sophisticated coffee before the Seattle company entered the city in the mid-1990s, with chains like New World Coffee, Cooper’s Coffee and Oren’s Daily Roast starting to pique the interest of coffee drinkers for a taste beyond watery diner coffee and the traditional “regular” cup from street carts, laden with milk and sugar.

But Starbucks saturated the market, opening up its first New York store in 1994 with plans to have 100 outlets in Manhattan within four years. (There are now nearly 200.) That created a huge market of consumers who would no longer tolerate subpar coffee — but it drove most of the smaller chains out of business.

One chain that held on was Oren’s, founded in 1986 by Oren Bloostein, which was forced to scale back a bit, said Jeffrey Roseman, an executive vice president and principal with the real estate service firm Newmark Knight Frank, who has worked with Oren’s to find locations.

“I think he got hurt,” Mr. Roseman said. “Clearly, he had a bigger chain before Starbucks got here. I think he sort of scaled it down, and only operated one or two stores through Starbucks’s height, and recently again picked up and has slowly expanded.” Oren’s now has nine locations in Manhattan, including one that opened last year in Times Square.

“I actually think you started seeing more independent coffee chains as a backlash to Starbucks,” said Andrew Moger, the chief executive and president of BCD, a real estate and development firm for restaurants that works with small coffee chains such as Joe the Art of Coffee, which has seven locations in New York, and Toby’s Estate, an Australian-based coffee chain that plans to open its first New York coffee shop in December on North Sixth Street in Williamsburg.

“As Starbucks kept growing, guys who had a more boutique product or what they considered to be a better product said, ‘I could do this,’ and they put their plans into action,” Mr. Moger said.

Dean Rosenzweig, vice president of retail services for the commercial brokerage CB Richard Ellis, said a combination of factors had prompted small coffee chains and independent shops to open.

“The higher jobless rates that came out of a softer market meant that more people were finding their entrepreneurial spirit within themselves,” Mr. Rosenzweig said. “The lower rents that came out of it were able to accommodate the model that a lot of these shops felt they needed to open up.”

As well, landlords became more flexible about considering food service businesses and new businesses as tenants — even ones with a strong odor. “In a softer economy, landlords have a little bit less leverage in that area,” he said.

Mr. Rosenzweig, who used to work for Starbucks’s real estate department, said that as a landlord representative, he has been getting lots of calls from Seattle’s Best Coffee franchisees of late.

“Seattle’s Best, which is Starbucks’s sister company, has apparently sold a lot of territory in the New York area, so you’ll soon start to see Seattle’s Best locations popping up,” he said.

Another large chain entering the New York market is Coffee Bean Tea Leaf, which is based in Los Angeles and has some 750 shops around the world. It opened a cafe at 1412 Broadway, just a block south of the new Oren’s — which is itself a block south of a Starbucks.

Mr. Rosenzweig is working with Pudge Knuckles, a start-up with a roasting facility in Red Hook that plans to become a chain with perhaps a dozen shops. Pudge Knuckles will open its first shop at 184 Kent Avenue in Williamsburg this fall and is scouring the Upper West Side of Manhattan for its second location.

The company takes pride in its New York City heritage, with names like East Coast Thriller and Five Borough Blend for its coffees, and aims to provide an unpretentious alternative to other overly sophisticated coffee chains, said Ivan Greene, a former professional rock climber who started Pudge Knuckles with Hartje Andresen, a model.

Real estate brokers say there is still plenty of room for competition. “I would say there’s really no place in Manhattan where you’re not going to find a competitor,” said Shelton Franklin, a senior managing director at S. Blair Partners, a real estate services company that works with Gregory’s Coffee and other chains. “There’s always somebody a block away, but there still seems to be room for more.”

Article source: http://feeds.nytimes.com/click.phdo?i=04fd0489352a2842f3f2e1a3b723c670

Filed Under: Business News Tagged With: , ,

There’s One on Every Corner, but None Like This

August 27, 2011 by Leave a Comment

This one, in Seattle’s lovely Madison Park neighborhood, is where Howard Schultz, the company’s passionate chief executive, likes to pop in on his way to another day of brand building.

This one serves beer and wine. Prosecco? Of course. French presses are for sale next to the gas fireplace and across from the bins of coffee beans. By all means, sift those beans through your fingers. The jazz is textured but digestible. Shel Silverstein is on the shelf in a section for kids. Mr. Schultz’s recent book, “Onward: How Starbucks Fought for Its Life Without Losing Its Soul,” is also on display. (Buy it and you receive a $5 gift certificate.) A painting stretched across a long wall says, “We live in a beautiful world.”

A customer opens the door. It is still dark outside. Eyes turn discreetly.

Not him.

Things pick up.

Not him. Not him. Not him.

Were the baristas looking for their boss, who lives in a ton of house nearby? Were they anxious? Were they freaking out? Is it true that they undergo special scrutiny before they can work there? Do they sometimes wish they worked in one of those apathy-oozing independent coffee shops in an edgier part of town? Surely they have a tattoo or two beneath those buttoned black sleeves, right?

Good luck finding out.

“It’s an honor to work here,” said one, noting his necktie.

No further comment. Call media relations, they say. Call corporate.

Corporate calls first.

They say “security concerns” make them wary of discussing the fact that “Howard is there a good bit.” After all, he is a “high-profile person.”

Mr. Schultz has certainly been a man in the news lately and coffee is not why. In recent weeks he has called for a moratorium on political donations until a long-term debt deal is reached in Congress. He has also prodded other business leaders to take more risks, to do more hiring, to be more assertive in getting the economy going.

No wonder he needs a doppio espresso macchiato each morning.

“He waits in line,” said Patricia Smith, a regular at the store. “He wears really good shirts, and usually jeans.”

“He’s usually alone,” said Wayne Smith, her husband. “You can tell he’s looking around.”

Perhaps he will notice the man reading “Design as Art,” by Bruno Munari. Hopefully he will not witness the kind of mix-up that caused the Smiths to wait extra long for their “double tall soy half-caff lattes with no lids.”

“Really, this has happened once in five years,” Mr. Smith said.

They received coupons for free drinks. “The baristas here are so friendly,” Ms. Smith said.

Corporate calls back, warmer this time. They say the employees at the Madison Park Starbucks are hired through normal channels. They note that the store, recently remodeled, is based on “a palette” that the company has experimented with in a couple of other locations, and that will be applied at 1,700 stores next year.

Only a handful of Starbucks stores will sell alcohol, said a spokesman for the company, Corey duBrowa. But their baristas had better perfect those doppio espresso macchiatos. Mr. Schultz visits up to 20 Starbucks stores a week in Seattle.

“And he always orders the same thing,” Mr. duBrowa said.

Article source: http://feeds.nytimes.com/click.phdo?i=2de72d89b290e6b08fda112efaef2bb4

Filed Under: Business News Tagged With: , ,

Square Feet: A Suburban Town Sees Housing Where Retail Rules

August 17, 2011 by Leave a Comment

It is an urban style of living — Mr. Eppolito can walk to two coffee shops for his morning brew — that he compares to Manhattan or Hoboken. His condominium, called 40 Park, is part of a burst of development and redevelopment that has brought more than 500 new residential units to Morristown in the last three years, attracted young professionals and well-to-do baby boomers, and ignited interest in the town of about 19,000, said Mayor Timothy Dougherty, who was elected in 2009.

“We’re very fortunate in this economy that people still want to come here and invest,” said Mr. Dougherty, 52, who is the chief engineer at the Prudential Center in Newark. “We have a huge younger population moving in. I have people every day wanting to meet in my office and wanting to talk about different ideas.”

Now the town is hoping the recent residential growth around the Green and the train station will carry over to Speedwell Avenue, where a mixed-use project that would displace small businesses and a number of 19th-century homes in a largely Latino neighborhood has met with a less-than-ecstatic reception.

Over all, Morristown seems to be doing relatively well in the economic downturn. Of approximately one million square feet of ground floor retail space available in Morristown, just 4 percent is vacant, according to estimates from Jennifer Wehring, the director of marketing for the Morristown Partnership, which oversees a special improvement district formed in 1995 when big retailers like Woolworth’s and Macy’s were closing.

Recent privately financed residential projects include 217 one- and two-bedroom rental apartments at the Highlands at Morristown Station, billed as a “transit village”; 36 luxury condominiums at the Vail Mansion on South Street, a main artery leading to the Green; 78 luxury condos and penthouses at 40 Park, a property overlooking the Green; and the Metropolitan, 130 apartments with upscale amenities behind 40 Park, connected by a brick plaza. The 40 Park project replaced Epstein’s, a landmark department store on the Green for nearly a century.

Debra Tantleff, vice president for development of the Roseland Property Company, a developer that has invested more than $250 million in new construction in the town in less than a decade, said there was a huge appetite for new residential units. “People want out of Jersey City, Hoboken and Manhattan,” she said. “The pitch we are selling is the lifestyle in Morristown.”

Among the lures are nearly 100 restaurants within walking distance of the Green; the Midtown Direct, a New Jersey Transit rail link into Manhattan; and a history that includes George Washington, who drilled his troops on the Green in 1777.

The Speedwell Avenue project, in the works since 2004, is planned to have 800 residential units in low-rise buildings on 11 acres, with 65,000 to 85,000 square feet of ground-floor retail space. It will be built in four phases.

The first phase is to include 268 studio, one- and two-bedroom apartments with underground parking on 2.3 acres, but the project has stalled because of the recession and haggling over the percentage of affordable apartments, a figure that went from 20 percent in the euphoric period before the crash to a more economically manageable 10 percent, Mr. Dougherty said.

Phase II, on a site adjacent to the first, has been designed on about 3.5 acres to include two apartment buildings with up to 200 rental apartments, a two-acre “mini Green” and 14 town house units, although the exact mix has not been decided.

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