Don’t get caught up in all the hype.
It’s a warning; a reminder to take a step back and be pragmatic.
Here’s another adage: Always have a backup plan. That one is more self-explanatory.
Downtown Schenectady is no Silicon Valley, but the city has been able to lure in several tech companies by way of local and state incentives: grants, low-interest-rate loans, PILOT agreements and additional perks from initiatives like Start-Up NY.
It’s safe to say Schenectady is having no problem at all when it comes to economic development in its downtown improvement district. But proceed with caution. Nothing lasts forever, and things can change in an instance.
When it comes to how these tech companies operate – or any business for that matter — local governments rarely have any say other than enforcing minor monetary penalties if companies, say, fail to hit certain job-hiring goals.
And while these businesses use public tax dollars to at least partially renovate and customize downtown properties, not much can stop them from cutting and running if they happen to go belly-up.
I point to Quirky as a cautionary tale, although their story has yet to come to an end. It seems like only yesterday the young startup opened its state-of-the-art office and call center in the heart of downtown Schenectady.
Now, a year and a handful of months later, CEO Ben Kaufman announced his company is nearly out of cash, although he did not go as far as to say it was insolvent.
The cause of it all? Bad decision making, particularly with Wink, the company’s signature platform.
It’s that simple. Businesses come and go all the time, and tech companies more often than others. There’s more volatility in the industry. Word on the street is Quirky could close up shop in Schenectady.
This seems so strange considering the company’s arrival last year created a lot of buzz and fanfare, so much in fact that it quickly became the darling of the city’s downtown renaissance.
Everyone was clamoring over Quirky’s innovativeness and financial backing by juggernaut General Electric. I was an early skeptic, but generally thought the company could obtain long-term sustainability. That was apparently foolish of me.
Fast-forward to present day, and it looks as if most people are in a state of shock and awe after hearing the bad news. Regardless of what Metroplex’s Ray Gillen says publicly about not being worried about Quirky’s present predicament, he should be concerned.
First and foremost, and thankfully, the company’s conceivable demise will not have a devastating impact on the local economy. But that doesn’t mean its situation shouldn’t be used as a learning experience for the city, county, Metroplex and the Downtown Schenectady Improvement Corporation.
These stakeholders and leaders have to understand the risks and rewards behind recruiting certain types of companies into Schenectady.
Quirky has already initiated a round of over 100 layoffs in New York — mostly from its Manhattan office — and more are likely to come. It’s only a matter of time.
In addition, if the company were to break its 10-year lease agreement and vacate its expensively renovated and customized space at Center City, it’s not as if the city can quickly turn around and lease it out to another business. It’s a process.
Let me say it again. Businesses come and go all the time; it is just how things are. The bigger concern is not the nature of the private sector, but how our leaders vet businesses and develop contingency plans per chance these businesses do not make it in Schenectady.
And with the Rivers Casino and Resort to be built up the road in less than two years, more businesses will find new homes downtown, that’s for sure. But what kind of businesses will be moving in and what can we expect from them in terms of sustainability?
These are important questions that need to be factored into every decision being made. Obtaining 100 percent occupancy in the downtown improvement district cannot be the only thing on the minds of our leaders, even if achieving such a goal were a realistic possibility. Just because something looks calm on the surface does not mean everything is just as calm underneath; peel an onion, there’s lots of layers.
We want our leaders to expect the best but prepare for the worst.
Maybe Quirky is gone a month from now, maybe not. The point is, the best thing for Schenectady is a speedy recovery in the event the company does leave.
The city has gone through some tough times and has hit some low-lows. No one expects those times to reoccur, but that doesn’t mean the city should forget its own past and what can be learned from it.
Downtown Schenectady went through three-plus decades of stagnancy and borderline destitution prior to its recent resurgence. Our leaders cannot control what decisions businesses make, but they can control how Schenectady reacts to the outcome of such decisions.
In the case of Quirky, it’s better to be safe than sorry. Our leaders should be planning a future without them.
Robert Caracciolo is a regular contributor to the Sunday Opinion section.