Can TechShop Pittsburgh be saved?

A June 30 deadline to find funding is off the table as conversations try to keep the maker space here.

tech shop
mj slaby / the incline
MJ Slaby

A corporate-set Friday deadline to save TechShop’s Pittsburgh location is no more.

At a members’ meeting Tuesday night, Gadsden Merrill, TechShop Pittsburgh general manager, told the group of about 30 that conversations would continue past the deadline previously set to find a nonprofit or other entity willing to fund operations.

While there’s no decision just yet, Merrill said conversations are making progress. He said TechShop CEO Dan Woods and CFO Mike Hilberman visited Pittsburgh for in-person meetings with potential funders Thursday.

“We didn’t hear a lot of nos,” Merrill said of the meetings. “The puzzle pieces are coming together.”

Opened in 2013, TechShop is a maker space in Larimer that offers memberships, as well as day passes, for Pittsburghers to come in and use a variety of tools from laser cutters to welding bays, no matter their starting skill level. It’s been the home to companies like BoXZY, PieceMaker and SolePower, providing a space for startups to create prototypes and later, their products. The space also hosted President Barack Obama in June 2014.

But in a May 31 email to members, Woods announced a structural change that included the closing of TechShop Pittsburgh on Sept. 1. — and leaders later gave that location one month to see if it could be saved.

For Joel Johnson, creator of BoXZY, a desktop 3D printer, laser engraver and computer numerical control mill, the announcement of TechShop’s closing spurred him to spread the word about the shop’s importance. Johnson credits his company’s existence to TechShop and said it’s invaluable.

“It’s like what libraries dream they can be,” he said. “It gives people to tools to do something.”

He’s not alone. Other TechShop members, staffers and those in the maker and hardware communities are taking stock of what TechShop’s closure could mean for current and future startups, as well as searching for a way to save it. TechShop staff spearheaded conversations with potential funders and hosted weekly meetings to keep members in the loop. On Tuesday, they discussed the possibility of crowdfunding, saying that an email will still go out to members at the end of the month with information about options in case the shop does close.

Without specifics to share just yet, local TechShop staff and members remain optimistic. One thing is clear — a maker space like this one is needed in one form or another.

Why TechShop needs a new funding source

One thing that multiple people inside and outside of TechShop agreed on is the business model was part of the space’s doom in Pittsburgh — and not an indicator of the local hardware scene.

“It’s an indication of challenges with the TechShop business model and rent prices,” said Bob Starzynski, director of business development for Innovation Works. He said the hardware community here is growing.

“The annual applicant pool for hardware companies interested in joining AlphaLab Gear has more than doubled since the program was launched in 2013,” he said. (Every AlphaLab Gear company has a TechShop membership.)

The news of the Pittsburgh closure came as part of a larger announcement about a change in business model and shift for the brand, Merrill said.

TechShop previously relied on memberships and educational programs as main sources of revenue, but Woods announced the company was shifting to a “new partner licensing model” that allows other companies to operate the shops. It’s a model that TechShop is already using in France, Japan and the United Arab Emirates, he wrote in his email, obtained by The Incline.

But in Pittsburgh, the funding just wasn’t cutting it.

Woods said the shop didn’t meet operating expenses. Mike Catterlin, vice president of marketing for TechShop, later told the Post-Gazette that the Pittsburgh shop “loses an average of $30,000 per month.”

Woods wrote that “one or more of Pittsburgh’s many foundations, universities and corporations may step forward to express an interest in becoming a licensee of TechShop Pittsburgh. If this were to happen, we will go the extra mile to ensure business continuity. However, I don’t want to set any false expectations that this will in fact occur.”

So far, Merrill and Erin Oldynski, who specializes in business development and community engagement for TechShop, said there’s been interest in helping with parts of the shop. While it’s possible to piece together the funding from different groups, the goal is one source, Merrill said. It’s also possible that the shop could move locations.

But no one has said they’re willing to take on the entire thing — and no one has stepped up to fund the biggest piece: equipment.

The equipment is worth about $360,000, and the entity would own it, Oldynski explained during the meeting. Members discussed crowdfunding to pay for the equipment, but someone would still need to step forward as the owner of the equipment.

Member numbers also hurt Pittsburgh’s revenue.

It’s a dedicated group, but it’s in the 400 to 500 range and other shops have 700 to 800, Merrill said.

“At the end of the day, we needed more numbers to be sustainable,” Oldynski said. She said other TechShop locations have major corporate sponsors that buy memberships for their employees. Think Ford for TechShop Detroit and Arizona State University for TechShop Chandler, Ariz.

Not for a lack of trying, Pittsburgh never found an institutional partner who would have 200 to 300 memberships, Oldynski said, adding that the city is “on the cusp of a renaissance of manufacturing” and is a university- and hospital-town where that type of institutional partner should be possible.

TechShop formed several partnerships this year that were in pilot program mode when the closing decision was made, so those pilots were never fully tested to see if they could work, she said.

The maker space is about creating a market and businesses, it’s not about a bottom line, added Johnson, who said it helped boost Pittsburgh’s brand, diversity and small business eco-system. Johnson was named among The Incline’s Who’s Next: Tech class.

“It may not be profitable as a business, but it is profitable for Pittsburgh,” he said.

Maker space 101

TechShop isn’t the only maker space in the city. Schools have maker spaces. Universities have them, too. There’s also HackPittsburgh, a community-based workshop space and Prototype, a feminist and gender non-conforming maker space among others.

Each offers different things to different groups of people with various requirements for entry. There’s no single resource on what’s available and to who in the city’s maker spaces.

In the case of TechShop, the space has multiple roles. There are startups from Alpha Lab Gear working on prototypes, companies like BoXZY, artists, people who stop by once to use one tool, kids and teens in youth programs and even teachers learning to use the tools at the schools where they teach.

“It’s a platform,” Merrill said, adding that having access to tools and training brings down the time and cost for hardware startups.

Take SolePower. The team started at Carnegie Mellon University incubator Project Olympus while they were students, then went to Alpha Lab before there was an Alpha Lab Gear. They found a place to make prototypes by asking around, but when TechShop opened it was the best and least expensive solution, said Hahna Alexander, CEO SolePower.

It’s “really a space for people to experiment and have those successes and failures in equal measure,” said E. Louise Larson, who is senior manager of creative media at TechShop corporate and a co-founder of Prototype with Oldynski.

The same amount of time and energy at TechShop can be “a million-dollar startup or a frustrating afternoon,” Larson said.

Plus, there’s a sense of community where someone with more expertise would pop their head over to say “What about this?” or “Did you try that?” The advice isn’t coming from professors like it would at a university, but from engineers and retirees, Johnson said.

The tools “act like a campfire” where people come together around them and conversations start, he said.

That sense of community is essential for entrepreneurs, said Sharon Alvarez, the Tom W. Olofson chair in entrepreneurship at the University of Pittsburgh. She said entrepreneurs need a space to get resources as well as insights and different opinions.

But finding an entry point into the maker community isn’t easy, several members of the community admitted.

Pittsburgh has so many great resources, but it can be hard if you don’t find a niche, Larson said, adding that while there is a lot of overlap between maker spaces, TechShop was a starting point for a lot of people.

Whatever happens with the shop, there is going to be an opportunity to grow the maker community, she said, adding she’s optimistic about saving the shop. Without TechShop, Oldynski said people would lose needed tools, but eventually alternatives would pop up.

“It’s not something you can replace overnight,” she said.