Benjamin’s Desk… Where the 1776 Revolution Ends in DC
Benjamin’s Desk in Final Negotiations to Purchase 1776
Let’s start with the end and work forward. Want to know where the 1776 Revolution Ends in DC? In Philadelphia at a place called Benjamin’s Desk.
Badly mismanaged and out of cash…. 1776 as we know it, was up for sale.
Recently I got a call from a Philadelphia VC who asked what I knew about 1776. He continued and asked me if I knew a local Philadelphia company he’d been tracking, Benjamins Desk (BD)… I then dug into Benjamin’s Desk and boom. there it is! BD is a coworking space like MakeOffices or WeWork… that partners with 1776 on EvanFest, commonly referred to as the Challenge Cup. They are users of 1776’s Union Software product. Most importantly BD is in expansion mode. They’re growing.
Unlike 1776, BD was bootstrapped with no government handout in June 2012. According to Crunchbase, they raised a mere $150K of outside investment in August of 2013. Word on the street in Philadelphia is that BD is expanding to Washington DC and are committed to turning the 1776 Frat house into an actual business. BD just may be able to pull it off. While 1776 couldn’t decide if they were a coworking space, an incubator, a game show, a software company or a venture fund.
BD seems to be better at property management and less distracted by shiny objects than 1776. They don’t focus on the glitter. In fact, they are more like a Philadelphia Version of MakeOffices. They are regional WeWork. A coworking space. In just 4 short years they’ve opened a total of eight locations: six in Philadelphia, a location in Ambler PA and another in Wilmington Deleware
The Little I Know About The Deal
I’ve heard that BD’s offer to acquire 1776 is in hand. I’m not sure if the offer was unsolicited or to whom the offer was made. Once in hand, it wound up on 1776’s major Investor, Steve Case’s firm Revolution to run the process. Case invested in 1776 in March of 2016 and Ron Klain, a Partner at Revolution took a board seat at the time. If Ron’s name sounds familiar, you may remember him as the lawyer portrayed by Kevin Spacey in HBO’s movie Recount. Ron was the General Counsel for the Gore Recount Committee in 2000.
Once Ron, who I believe is running the process, had the BD offer in hand it seems he solicited other offers. Apparently, multiple reputable well-funded parties, both local and outside DC, were interested but were unable to get through the process in time to respond to the deal. Which means right now BD is the only game in town. Barring any snafus, the deal should close in the next 3 weeks.
Updated 9/23: It appears that BD will take over the 1776 Dubai and Brooklyn Navy Yard spaces. One source tells me Brooklyn was a major financial drain on 1776’s cash flow.
I don’t know what happens to the “Venture” Portfolio, which includes the companies acquired when Vornado moved the Disruption Crystal Tech Fund to 1776’s Venture Fund. I don’t know the fate of the companies or the fate of the reported $12.5 million 1776 said they raised in 2015. I’ve heard that the bulk of the money pledged was from Vornado (former Crystal Tech Fund investors who lost faith in Paul Singh) According to people close to the fund, $8 million of the fund had been drawn down (which again is not clear if the $8 million in cash and/or cash and book value of the acquired portfolio).
What is clear is:
- The Fund is done… no more investments
- Burfield will be leading a new software company based on 1776’s Union. If you’re keeping score, this will be his 4th try at success.
It appears that the revolution no longer begins at 1776 DC. It’s apropos that Philadelphia, the City that was the actual first US Capital before there was ever DC, the location where the declaration of independence was signed, is arguably where the revolution began. It’s also where it looks like the revolution continues.
This could be good news for DC. The company that has taken over 1776 seems to have found a business model that works. Instead of a 1776 whose vendors as of late, were constantly asking are they going to make it and are we going to get paid?
Benjamin’s Desk appears entirely focused on their knitting as opposed to 1776’s pivot till you puke strategy. There’s no, one day we’re a coworking space, then we’re a Venture Fund, then expands by taking over San Franciso’s Ass Hattery. Wait we’re not better Ass Hatterists than the original team let’s close the Hattery. Oh wait, let’s be a software company….. No! No! Oh hey, shiny object, Brooklyn. I have an idea, let’s teach communities how to create a startup community… after all. “if you can’t-do… teach.”
This could also be Evan’s chance to shine. He’ll be running a software company… a more focused business. It would be good for DC if Evan can pull off turning Union to one of the regions great companies. We need more great Tech Companies and great for Evan. He’ll finally have a success.
Coming Next Week, Part 3, The Rise and Fall of Evan Burfield
We’ll track Evan’s path from HS Wonderkind to the anointed leader of the DC ecosystem. We’ll track some of the bodies he walked over and the way, up and down, and up and down. And we’ll talk about some of the things that went wrong at 1776.
Look for Part 3 Late Next Week.