3 Birds struggles to fly

54 Comments

1. 

   Many

    /  August 12, 2013

   Nancy,

   Success in this case is more than discounts, reasonable rents and sustaining restaurants at lunchtime. An entrepreneurial endeavor is much less likely to focus, attract talent, mature, flourish or even just survive without an environment that amalgamates ideas with other start-ups. If Chapel Hill wants to be a player, it needs an environment that better fosters the culture of ideas and the amalgamation of entrepreneurial feed stock. A start up “foundry” if you will. I think there is sufficient but untapped interest, maturity, and expertise locally to have such an environment. I also think the other components such as financing and social environment are here. What is missing is the “foundry buzz” that feeds the network effect.

   From a marketing perspective, I think 3 birds gets the fact that the traditional “Paid, Owned, Earned” marketing strategies alone are breaking down. The overwhelming onslaught of marketing noise on all channels makes difficult for the consumer to distinguish one message from another. The consumer has thrown up some reasonably effective but indiscriminate counter messages to the noise; there is little to no filtering. Which in turn leads to more noise……which gets sent to the spam folder and…..you get the idea.

   In 2010 McKinsey defined defined two new media types and one of them is a significant and agile threat to the “Earned” media by the disgruntled and motivated called “Hijacked”. I think we will see more and more of this gorilla consumerism as it becomes easier and easier to do: http://www.mckinsey.com/insights/marketing_sales/beyond_paid_media_marketings_new_vocabulary

   Bottom line; it is a tough business, marketing dollars are in search of a strategy that works. 3 birds may have a solution. Perhaps also there are small but meaningful refinements that are untapped due to the lack of an “idea foundry”, such as better leveraging presence, identity, location and contacts to foster the dialog/content feed that in turn, leverages inbound and tunes outbound messages.

   One confusion on my part; reading 3 birds web site their press release discusses a multi-channel offering named “The Wire 2.0”, which sounds sort of intriguing, but I do not see it described on their “solutions” page…….could be the notion of marketing morphing into what amounts to publishing…….not sure.

2. 

   Former Bird

    /  August 12, 2013

   As a former employee who left on their own accord this article made me chuckle.

   The fact that the company grew to any size was in spite of the owners (read that as the husband/wife combo) rather than because the owners. The owners have no leadership abilities, no people abilities and do not allow their employees to do what they were hired for.

   People are leaving the company as fast as they can, multiple per month, and many more are currently looking.

   The author is right, many startups do fail but most of them fail because they have a bad business idea. 3Birds has a good business idea and is marketing it to the right vertical. What they do not have is any leadership, any vision or any ability to keep their employees happy.

   You would be tough to find a single former employee who is happy there. I for one have never been so happy to leave a company as I was on my last day of employment there.

3. 

   Diogenes

    /  August 12, 2013

   I am confident Miss Moto will enlighten us with how this all works.

4. 

   Another bird that flew the coop

    /  August 12, 2013

   Thank you, Nancy, for publishing the first article on 3 Birds Marketing that exposes them for what they do best: over-promise and under-deliver. Unfortunately their clients have known them for this tendency since the company’s inception, and I hate that it took the Town of Chapel Hill so long to figure it out.

   Every other article I have read about 3 Birds has praised their employment of recent grads and local talent, congratulated them for creating numerous jobs in Chapel Hill. I’ll be the first to say that any job 3 Birds creates is not a job you should take, nor one that will last if you do.

   Like Former Bird, I am also a former employee of 3 Birds Marketing. I agree with all of Former Bird’s comments and cannot stress enough the terrible work environment created and maintained by the husband and wife founders.

   Imagine your excitement to receive your first job offer as a recent graduate and then find yourself working tirelessly for a less-than-average starting salary in a hostile and thankless work environment. I think it speaks volumes that I am the third employee in an email chain rejoicing over the publication of this article, which I in turn forwarded to a handful of former employees.

   It has been two years since I worked there, and only three of the approximately thirty employees that were there when I left still work there today (excepting the founders). Three of thirty! Think about that. That amount of turnover is obviously unsustainable. You’d think that the founders would realize it and do something to retain their employees– forget attracting top talent. If you check their website for current employees, you’ll see far fewer UNC graduates on staff than two years ago– many come from small, poorly-ranked institutions.

   While I hate that Launch and Chapel Hill as a whole has gotten involved with this company, I will (not-so-silently) rejoice in their failure and eagerly await their demise, regardless of the financial implications for a town I love dearly.

5. 

   Anon

    /  August 12, 2013

   Where do I begin…

   3 Birds never could fly… former employees have described how it was only able to get off the ground because it’s own financial backing. For this reason, it should never have been considered a startup in the first place. If you would like to know what a real startup looks like, look at what is happening in Durham right now. A startup, in a nutshell, is a great idea that has to prove itself in the marketplace before earning investment dollars. 3 Birds was never able to prove profitable in the marketplace… they just keep spending money regardless of how badly the company is doing.

   It is rumored that Layton and Kristen want people to believe that they are a real startup so that A) can they pretend they have proven the business model enough to woo investment B) They can pay less to their employees C) It makes them sound hip to the tech startup community.

   From what I hear, 3 Birds Marketing is simply a horribly run organization. They have a decent product, but have squandered some top-notch talent in their attempt to fulfill their own egos. They seem far out of their league. Kristen is a criminal defense attorney, and Layton is a salesman. Neither of which is equipped to manage people in a donut shop, let alone an interactive marketing agency. It is only a matter of time before the “well” (money) runs dry.

   Has anyone even checked these “employee” numbers? Is the employee number including unpaid (or seldom paid ) interns? Are they simply milking the free labor market in Chapel Hill, and taking advantage of students at UNC? Soon, putting 3 Birds on a resume will be more of a negative than a positive.

   I am disappointed in the town of Chapel Hill, not only for lacking judgement, but for involving the residents of Chapel Hill and the unsuspecting UNC students with these two clowns. Anyone reading this would be far better served to take this advice and avoid any relationship with 3 Birds Marketing.

6. 

   Nancy

    /  August 12, 2013

   Dwight Bassett said the employment numbers will be verified through the Employment Security Commission, which means the employees have to be on 3 Birds’ books, rather than hired as contract workers. The town’s agreement does not specify any minimum amount the workers should be paid.

7. 

   CitizenWill

    /  August 12, 2013

   Nancy, as you might recall, I asked the Town Council to review the financial and business plans of 3 Birds before granting concessions (which are larger than you outline given the cost of parking in W140).

   I also asked the Town Council set measurable performance targets and report back on the success of the biz.

   Got a very poor response by several Council members – including Mark – who has zero head for business, finance or creating/growing a company

   I’ve started a few local startup tech companies and consulted with others – tech like 3Birds is a tough niche to fill – their bare prospectus and ascribed intent didn’t seem fully baked to me at the time.

   We have similar problem in Frank – another poorly thought out and apparently troubled biz the Council heartily supported without performance goals or adequate due diligence.

   In 2005, and since, I supported helping local companies with revolving loans and other assistance but have always stressed that we do due diligence, set specific performance targets, report back regularly to the community on whether the help was being effective and be prepared to step out when targets were missed.

   I’d like Council to take this as a “learning opportunity” and rethink the Town’s process.

8. 

   Kristen Judd

    /  August 12, 2013

   I am one of the founders of 3 Birds Marketing. I suppose that I should thank you for your concern about our company, but I can assure you that your suggestion that there might wind up being disappointment about the volume of business brought to the restaurants, hotels and shops downtown by virtue of our employee base and the location of our business on Franklin Street are unfounded. Had you spoken with the proprietors or staff members at The Franklin Hotel, Lantern, the Carolina Brewery, Beer Study, Mellow Mushroom, Italian Pizzeria 3, TOPO or many other Franklin Street businesses, you would have found that our employees frequent these businesses regularly, we entertain clients in downtown restaurants, and lodge clients and new members of our leadership team who have relocated to the Chapel Hill area to work for 3 Birds while they are securing new housing at the hotel that is within walking distance to our office.

   It is a shame that you were left to write a negative piece based upon inaccurate information when you could have been the first to cover a very positive business development for our company. Layton Judd, another founder of 3 Birds, left a voicemail message for you responding to your call. Had you and Layton spoken before you published your post, he would have told you that we currently employ 43 full time employees and approximately 15 interns and part timers. We have several open positions that we are currently taking applications to fill. In addition, our intern class this summer was our largest yet. We are confident that we will meet or exceed our growth projections from both a revenue and staffing perspective.

   The fast paced, rapidly evolving, sometimes chaotic environment of a growing company is not for everyone. Some people thrive in a more traditional workplace with a clearly defined career path. I acknowledge that I am a workaholic and that I set high standards for myself and others. Some people consider me demanding because of this. Layton is a strong personality, some would even use far more colorful words to describe him. Starting and running a business is not easy and it’s not a popularity contest. If it was easy, everyone would do it. While our management style and our organization is not a good fit for some people, we wish all former employees success in their future endeavors and hope that they find positions that match their skill sets.

   As for the recent development, we are proud to have received national certification as a Women’s Business Enterprise by the Greater Women’s Business Council, a regional certifying partner of the Women’s Business Enterprise National Council (WBENC). So the prospects for 3 Birds are strong. Unfortunately however, it seems to be a sad reality of human nature that some people are all too willing to wish misfortune on others. To those who are rooting against us, you will find yourselves disappointed. 3 Birds is not going away.

9. 

   Nancy

    /  August 12, 2013

   Kristen — I wish I’d been able to talk with Layton, too, after he left a message returning my call. I tried twice more to reach him during the week. I’m glad you are able to set the record straight here. Wishing you success going forward.

10. 

    CitizenWill

     /  August 13, 2013

    Kristen, has 3 Birds met the goals it promised when it got the parking and other support the Town provided? How many of your employees live in Chapel Hill? Are there more now than when you got those spaces? What about wages – it seems like the promise of high paying jobs didn’t pan out according to the posters above. I worked Downtown 8 years (for a non-subsidized employer) and spent a good chunk of my pay on local services and goods. Are you suggesting your subsidized biz employees spend more than other unsubsidized employees Downtown?

11. 

    Happy Ex-Birdie

     /  August 13, 2013

    Oh Mrs. Judd,

    Please do not try to hide the companies poor leadership behind the curtain of ‘it’s a rapidly evolving, sometimes chaotic environment’. Please stop calling the company a start up, a company that has > 700 customers and is 4 years old is not a start-up.

    As for ‘fast pace’ your right. Things there are very fast pace but not because the company is busy innovating but rather the employees are busy doing the daily ‘fire drills’ to make the customers happy. I mean it just it is completely normal for customers to call up at 4:45 and demand something to be created by 5pm ON A FRIDAY.

    As for ‘rapidly evolving’ your right again. But do not confuse it with evolving because with a positive. It is rapidly evolving because every Monday Layton comes up w/ some new hair brained idea that is going to revolutionize the industry. So all the employees drop everything they were working on and start on this new direction only to have that direction changed again the following week.

    As for ‘sometimes chaotic’ your double right again. But not because so many good things are happening but rather because no one knows what they should be doing. Not to mention that painting chaotic in a positive light just shows the total lack of leadership or managerial experience.

    You mentioned there are 43 current employees, that is great. But you made no mention to the numerous employees which were convinced to move across the country, relocate their families, to only be fired because they were not performing up to your standards. However, your standards were never clearly communicated or they changed on a daily basis. You made no mention to the fact that an employee was fired on the spot for voicing their lack of faith in your leadership. You also did not defined the extremely high turnover rate? Why? Because it is not defensible? Anyone with leadership experience will tell you that a high turnover rate is a failure in leadership. The cost of hiring and training a new employee is many times that of keeping a current employee happy. You also did not defind that fact that all your high salary employees have either been fired or left.

    I for one hope 3birds does not fail but not for your sake but rather for the sake of the other employees there. If the company fails your family will be safe you. You live in a 600k house in a nice area of Chapel Hill but your legion of 20-something employees who live pay check to pay check will not be so lucky

12. 

    Another bird that flew the coop

     /  August 13, 2013

    If anyone wishes to investigate the founders’ track record of patronizing downtown businesses, I suggest you speak to Gary Crunkleton, who will have a most interesting story about the ‘colorful’ Layton Judd to share. Or perhaps an innocent Jimmy John’s employee who had a late-night run in with him.

    There is a reason The Crunkleton and other businesses were carefully left off Kristen’s list of downtown businesses they frequent, I promise you that.

13. 

    Another bird that flew the coop

     /  August 13, 2013

    While I regret Happy Ex-Birdie’s poor spelling and grammar, I agree with the sentiments.

    Former employees and interns of 3 Birds have moved on to positions with stellar tech companies in the area, like Saffron, iContact, ChannelAdvisor, Shoeboxed, Bronto and Click Optimize, while others are now at reputable agencies like Capstrat, McKinney, Mason Zimbler and Rivers.

    The problem was never that the environment was too chaotic or fast-paced for us. We are clearly a pool of capable talent who looked for the door once we realized we had been hired by a sham of a company with clueless, idiotic management. You don’t have to take my word for it– just check LinkedIn.

14. 

    Terri Buckner

     /  August 13, 2013

    It is so unfortunate that this site continues to allow anonymous postings. I know nothing about 3 Birds, but to have anonymous posters making these allegations is just reprehensible. If they feel strongly in their correctness, they need to take responsibility for their feelings.

15. 

    Anon

     /  August 13, 2013

    “Starting and running a business is not easy and it’s not a popularity contest. If it was easy, everyone would do it.”

    Another correction. You should have said “If it was easy, or if everyone had millions to throw around, everyone would do it.” More accurate.

    “While our management style and our organization is not a good fit for some people, we wish all former employees success in their future endeavors and hope that they find positions that match their skill sets.”

    Are you sure there have been no thinly-veiled statements/actions that hint at a sabotage of former employees’ careers?

    Free advice to 3 Birds: If you don’t want everyone to know how badly you treat people, don’t take PUBLIC concessions and then not deliver.

16. 

    Karma Bird

     /  August 13, 2013

    I don’t wish 3 Birds ill, I really don’t.

    But I think you have to take a good long honest look at yourself if this many people in the world have been so embittered and negatively affected by your actions.

17. 

    Many

     /  August 13, 2013

    I did not think Nancy’s piece was negative, only asking if Chapel Hills expectations were realistic and beginning a discussion on what might be done to make the environment better. So, I responded as such. I expect that Wills response was more to the point, having much more knowledge of the situation than I do, he seemed to legitimately ask if Chapel Hill was just “throwing money and hoping something happened” as opposed to “due diligence”. I do think that Will slightly missed the point that in the Ad biz, entertainment expenses are a significant cost of doing business and a single outing may well be a good deal more than the average twenty workers monthly lunch budget.

    Other comments are an example of “brand hijack” McKinsy refers to. I would wager that “so many….embittered and negatively affected” boils down to one, perhaps two disgruntled former employees or their spouses. They may or may not have a legitimate complaint, but are clearly venting personal grudges as opposed to being on topic. As I said, it’s a tough business, and giving a former employer “the bird” (so to speak) is so easy these days.

    I expect the principals can figure out who each other are. I would suggest to the “former birds” that the the best revenge is living well, and perhaps they should provide some competition for the the 3 birds.

    However, that does not mean one should ban anonymous posters, or that all anonymous posters should be painted with a broad brush. As shown above, one can get multiple “anonymous” accounts by answering forms with either false or easily discardable data, how would you know? “Terri Buckner” could be anonymous, hijacked or a known entity, but just not known to you…..

18. 

    Bird in the cage

     /  August 13, 2013

    As a 3Birds employee, I want everyone to know that it’s not that bad. First of all, 3birds does bring a lot of business to local restaurants. I don’t make enough money to “patronize” these restaurants, per se. But oftentimes Kristen and Layton will leave their lunch leftovers in a common area to be shared by the rest of the staff. Sometimes I’ll get an entire slice of pizza.

    Many of you have accused 3birds of not being a “real” start-up. Come on, guys. The owners are well aware of this. They’ve carefully crafted a seemingly chaotic, harsh work environment so that after 4 years of operating, it still has the feel of a true start-up that’s just finding it’s footing and continues to stumble gratuitously. It motivates me to walk into work every morning wondering if today is this crazy automotive marketing Jenga tower comes tumbling down.

19. 

    Many

     /  August 13, 2013

    Diogenes, I didn’t forget you;

    Vade retro Miss Moto! Vel non.

20. 

    Another bird

     /  August 13, 2013

    Many– you are certainly wrong about the “one, perhaps two disgruntled former employees or their spouses.” There are dozens.

21. 

    Nancy

     /  August 13, 2013

    OK, enough 3 Birds bashing. My point in all this was that the town maybe needs to think through the cost-benefit analysis of its deals. Why did 3 Birds merit discounted parking spaces but other startups, like Heat Bio, not even get a mention in the Chamber of Commerce newsletter? Becoming a startup magnet goes beyond parking spaces. We need buzz, along with parking. And goals, so we know where we want to go and recognize whether we’re on the right path.

22. 

    Terri Buckner

     /  August 13, 2013

    What makes you think the town, along with their county and UNC partners, didn’t think through the cost-benefit ratio of this deal? I don’t see any evidence that “due diligence” wasn’t done.

    “If 3 Birds doesn’t meet its employment target, its only penalty is to pay for parking at a discounted rate of $42.50 a month for each employee it is short. The parking lot was a sweet deal.” Getting the Rosemary Street space was an equally sweet deal for the town and it’s partners. Do you really want to complain that a few parking spaces isn’t worth the opportunity (and discounted space cost) of creating a business incubator? What kind of revenue was that parking lot generating before 3 Birds? I’ll bet it wasn’t much with the CH News being so depleted.

23. 

    Joe

     /  August 13, 2013

    Terri, I’ll argue it.

    http://boss.blogs.nytimes.com/2013/08/12/assessing-the-impact-of-business-incubators/

    Things like incubators, “startup” marketing companies, art galleries (as mentioned in the comments), and even things like kids’ museums are great for hype, but rarely good for business. These are not organizations that often bring in very much revenue or hire many people, and are often not sustainable. It certainly seems that the town has fallen for style over substance several times in the past few years in terms of dealing with promoting private businesses. While we have lots of very successful business people in town, I can’t help but think that very few are being consulted before making these kinds of decisions.

    – A successful Chapel Hill business owner

24. 

    Emily Farrar

     /  August 13, 2013

    I appreciate this article and the dialogue it has created. As a former employee of 3 Birds Marketing, I believe a lot of what was said here truly needed to be exposed. Although I personally had a negative experience during my time at 3 Birds, as did many of my friends and coworkers, that is separate from the fact that the deal they struck with Chapel Hill was poorly thought out on the town’s part. Doling out financially beneficial deals to business owners who have a seemingly endless stream of private funding and a lack of any sort of track record at creating high-paying, respectable jobs is not the way to build a startup-friendly environment.

    Startups are attracted to areas that offer educated talent, connections to investors, affordable office space, and a commitment to collaboration and innovation. I now work at a wonderful startup in downtown Durham, a city that has truly gotten it right when it comes to attracting and nurturing new businesses. Just look at the success of Triangle Startup Factory and the American Underground. There have been countless articles written about the Triangle’s blossoming startup scene, one of the most thorough can be found here, but you won’t find any Chapel Hill-based companies included. I hope that the town steers clear of 3 Birds Marketing and similar companies in the future so that it can truly capitalize on the wonderful startup ecosystem surrounding it throughout the rest of the Triangle. Best of luck to Launch.

    To all the former birds out there, congratulations on getting out, and I hope your careers are thriving. To the current team, I hope you are looking. I smile each time one of you connects with me on LinkedIn.

    Sincerely,
    Emily Farrar
    For full disclosure, I was the eleventh or so employee to be hired by 3 Birds in Chapel Hill, which happened a couple months after I graduated from Carolina in 2010. I lasted ten months at the company before moving on.

25. 

    Many

     /  August 13, 2013

    Joe,

    Good article. I would argue however that successful people and successful ideas very often do come out of environments where entrepreneurial experience and desire is dense coupled with appropriate resources and funding.

    I think the term “incubator” is cliche and over used, but government can make the creativity flow a bit more easily by removing obstacles and getting out of the way. The spirit seems natural around universities, if there is encouragement and places for people to play with novel ideas and technologies. To your point, the marketing companies, museums and art galleries are a side show, not the big top.

    Very often in the medical field (for example) government funding enabled research discovers a solution or promising technology inside the university environment and it is in turn licensed by the government or university to a start up to make the idea commercially viable……….or not, using vulture capital. The point being the risk and reward is primarily on the investors.

    That government-university-corporate partnership was one reason for the Carolina North push. Sadly, when we try to build this sort of stuff in a town with a lot of embedded interests like Chapel Hill, it tends to get bogged down in mind numbing, navel gazing bureaucracy….and that serves drive away the very entrepreneurial talent and environment that we were trying to encourage in the first place.

    NC State has been successful with it’s government-university-corporate at Centennial Campus. That effort kicked off (almost 30 years ago!) in 1984 from an old part of Dorothea Dix, and was followed up closely by another gift of land the following year, the first building being occupied a scant 4 years later in 1989. Carolina North on the other hand, has been wallowing since 1998 with little to no progress until just recently. Perhaps it will happen more quickly now…..we shall see

26. 

    Mark Marcoplos

     /  August 13, 2013

    I’ll second Terri Buckner’s perspective on anonymous posts. You end up with suspect, 2nd rate ideas. Case in point — “Many’s bizarre assertion that Terri Buckner may not be who she says she is”. Really? Many is one dimensional and afraid to be identified, Terri is appearing as herself. So many others are copping out and being anonymous. Let’s get real.

27. 

    Joe

     /  August 13, 2013

    Mark: There are many people who have perfectly valid points that simply cannot and will not use their real names online. Some would even call it foolish to write something attributed to yourself and leave it up for the world to see, forever, on a computer over which you have no control.

28. 

    Anonymous in Raleigh

     /  August 13, 2013

    3 Birds has been hemorrhaging employees since pretty much it’s conception. The owners like to think its the stress of the job that drives people away but in fact it’s the owners. They’re little more then a punch line in the advertising community here.

    Don’t work here, you won’t even make it a year. But if you do decide to chance it, it’ll be okay. Everyone will realize why you left 3 birds.

29. 

    Many

     /  August 13, 2013

    Mark, How do you know Terri is who she (it?) says she is? How do we know you are?

30. 

    Diogenes

     /  August 14, 2013

    Miss Moto — where are you? We need you to explain all this? Please!

31. 

    DOM

     /  August 14, 2013

    Ms. Buckner

    Only naive posters use their real name nowadays. Some may think it’s courageous, but those with any sense know it’s just plain self-destructive.

    An ex-NSA employee

32. 

    CitizenWill

     /  August 14, 2013

    Nancy, are you planning to do a followup with the Town to get specific numbers to measure against the promised performance goals?

    While I find it troubling to hear of the poor work conditions from folks claiming to be former employees (as any biz’s success is directly tied to its employees success), I think an analysis of what – specifically – 3Birds has delivered on – both to the local economy and expanding job ops locally – is what the Town owes its citizens.

    Quite simply, the community invested in 3Birds based on the merest prospectus – has the community gotten the expected return?

    To broaden the discussion, it would be interesting to do what the majority of Council is loathe to do – revisit some past economic forays underwritten by our residents tax monies – say the Frank decision – and see if they also “paid off” as expected.

33. 

    Terri Buckner

     /  August 14, 2013

    Using Nancy’s data supplemented with details from a couple of phone calls, here are the financial details:
    On December 1, 2012, the town and 3 Birds signed a sublease which obligated the town (with assistance from the county and the university) to $105,000 for a 3.0 year lease (according to Nancy). In exchange, 3 Birds committed $30,000 in marketing services for the LaUNCh incubator, $30,000 in cash, and $42.50/month for 26 parking spaces. BTW, there was no income on this lot prior to the 3 Birds deal.

    Town investment (3 years): $105,000
    3 Birds investment (3 years): $137,955, plus whatever revenue is generated for local businesses from 3 Birds employees and customers

    Now, less than 1 year after the deal was signed, Will wants an accountability report on how many jobs have been created as part of the town’s “due diligence” and Nancy is questioning their business strategy based on anecdotal evidence.

    Does anyone really think that 9 months is sufficient time for a business that has invested heavily in this town to live up to it’s portion of a 3-year deal? Don’t you think this might be just another facet of what so many claim is the “anti-business” attitude of this town?

    From the National Business Incubation Association (granted a biased source):

    Why are business incubators worthy of government subsidies?

    Government subsidies for well-managed business incubation programs represent strong investments in local and regional economies. Consider these returns:

    Research has shown that for every $1 of estimated public operating subsidy provided the incubator, clients and graduates of NBIA member incubators generate approximately $30 in local tax revenue alone.
    Source: Extrapolated from data in Business Incubation Works

    NBIA members have reported that 84 percent of incubator graduates stay in their communities.
    Source: Business Incubation Works

34. 

    Nancy

     /  August 14, 2013

    Terri — I’m not questioning 3 Birds’ strategy. If anything, I’m marveling at the deal they brokered with the town over parking spaces alone, much less getting out of the lease. You can’t look at investment alone in evaluating a deal. You have to look at the return you get on your investment. 3 Birds’ invested $137,955 over 3 years. In return, they saved $139,320 (parking for 43 employees for 3 years) and $105,000 to pay off their lease at Rosemary Street. Presumably, they have to pay rent on their current place, which they’d have to do if they’d moved to Durham, so that’s a wash. The town gets space for Launch, presumably for less than they could find elsewhere (but we don’t know) and lunch and dinner business for West Franklin Street restaurants from 3 Birds employees. If 3 Birds has swapped high-paid employees for low-wage workers, that changes the equation. And because of high housing prices in Chapel Hill, low-wage workers will pack their lunch, then go home to Durham at night to spend their grocery money and discretionary money outside of Chapel Hill. Maybe Chapel Hill got the value it wanted. But someone should at least be asking the questions and assessing how well the ROI met the town’s expectations.
    Will — I’ll check with the town in January to find out whether 3 Birds met its employee target. The town considers only year-end ESC filing.

35. 

    Terri Buckner

     /  August 14, 2013

    Nancy, ROI is a technical term and assumes that the town knows the dollar value of all variables, which they don’t. Instead of targeting 3 Birds, perhaps you should place your focus on encouraging the creation of credible, consistent economic metrics for the town to use in assessing future deals. FWIW, I believe that work is underway.

    I just did a salary search for an eCommerce Sales Manager for 2013 and 2010. Salaries have dropped by about $8,000 for all 3 ranges (low, mid, high) over those 3 years. So maybe instead of signalling that turnover in top wage earners is a sign of failure at 3 Birds, it signals a response to the market. Looked at another way, giving new grads jobs is a great service for any business to offer in this or any other university town.

    My point isn’t to say anything particular about 3 Birds; I don’t know anything about them or their business practices. But I think this is a complex issue and deserves more than a quick blog post to understand. Especially when the blog post opens the door for libelous claims like this one has done.

    BTW, I still think it is naive to think that any company is going to meet employment targets in 9 months on a 3 year contract.

36. 

    Matt Czajkowski

     /  August 14, 2013

    There were at least a couple of Council Members who questioned the economics of the deal. Two happened to be people who work in business and have experience with early stage companies. Indeed they insisted that Roger Stancil renegotiate the deal from its original more generous terms. The Orange County BOCC approved the original, more generous, deal using funds from the quarter cent sales tax which the local Chamber of Commerce had so aggressively supported.

    For several months prior Jim Kitchen and I had been working to see if we could use the Old Library building for the incubator. Mayor Kleinschmidt and Roger Stancil were involved in the discussions. We had finally managed to get the estimates for getting the building into sufficient shape to use it for the incubator down to sensible levels when this deal was presented.

    I personally got calls from several of the proponents of the deal to explain at great length all the virtues of it, some of whom post occasionally on this blog but have not commented on this topic (at least under their own names Many!) I do believe that Launch is a worthy undertaking but it remains to be seen whether the deal that was cut is a good one for the Town and County. Expressing any reservations about the deal at the time was not popular in some circles.

37. 

    Many

     /  August 14, 2013

    Matt

    I had no knowledge of the detail of this deal with 3 birds, and I am a great supporter of the old Library as a entrepreneurial foundry. From what I can understand about three birds business, they would not meet my definition of the type of enterprise I would suggest for the foundry. OTOH, 3 birds would be the type of business that I would look to for expertise in bringing the entrepreneurial foundry efforts to market.

    I find myself aligned in my thinking with Terri on the subject of 3 birds:

    o First, sufficient time has not passed to judge the outcomes.

    o Second, as you are well aware, the support of start ups is a risky business the due diligence should focus on how the investment brings us closer to the overall goals of the community rather than simply RoI – any single investment is unlikely to be a great money maker because only 15% of start ups succeed, successful start up seed money generally needs a 7x RoI simply to break even – (7×15% = 105%).

    o OTOH…….. and third, as I hinted at above, there can be significant positive intangibles associated with investing in an entrepreneurial environment. 15% of start ups, succeed and some achieve a significantly different and more lucrative model than they had planed, 85% of the time they fail altogether. The people that tried once, will try again and be much wiser for their experience. Many will join the successful 15%. If an interesting, creative and competitive culture abounds, that creative destruction very often leads to spin offs, other ideas and the “network effect”. People will see this culture as a vibrant place where interesting jobs and solutions can be found.

    People with expertise like yours could make a big difference by mentoring and championing this sort of thing.

    Personally speaking, I would be much more supportive of a 1/2 cent tax for economic development bringing creative solutions and thinking to market than sending the money to TTA as a jobs program for a few UNC urban planners and in the process, dismantling CHT for the rest of the population.

38. 

    CitizenWill

     /  August 14, 2013

    Matt, agree that some Council members did sharpen their pencils, run some numbers and ask for more information (which, if they got, the public didn’t). I tried to be clear not everyone was enamored with the deal (and well understand – after getting a bit of drubbing from the local CoC exec – that even asking questions is considered “bad biz” by some).

    Terri, your analysis and subsequent assertions are quite flawed.

    First, the $30K in marketing is set by 3Birds and the value to the Launch startups – at least with the dearth of publicly available information and lack of objective metrics – not easily measured.

    Second, you say it’s a year – then 9 months – then seem to indicate even less than that – and plea how unfair it is to ask how 3Birds is doing. It has been a year – and from what Nancy dug up and subsequent comments – clearly not too soon to see what 3 Birds has done. I guess you prefer to wait until the end? I understand your taxes aren’t going into the deal, mine are and I’d like to have more transparency on what I’m getting.

    Third, there has been a consistent pattern around these deals (of which I include West 140) that Council has catered to. Make broad assertions to community utility. Offer some goodies without much upfront objective due diligence, very few – if any – performance goals and guarantees built-in and little to no followup or continuing oversight.

    Along those lines – why haven’t we had a check in on Frank from Council? What about the demographics of West140, the revenue stream from its underground parking, initial projections of tax revenues (now folks are occupying it)?

39. 

    Chapel Hill Local

     /  August 14, 2013

    This is a pretty reckless article and seems to be based on personal vendetta. A public article, based on half the facts has now caused a public lashing at 3 Birds expense. Companies have issues but posting this seems like an excuse to bash a local company and seems petty. Is this really the most important thing happening in Chapel Hill? Lord, please let basketball season start soon so our news outlets can produce something of value.

    PS – The only person who should have remained anonymous in this deal is the Author.

40. 

    Nancy

     /  August 14, 2013

    Chapel Hill Local — I don’t see how you can infer recklessness (all facts are attributed) and a personal vendetta (none on my part). I didn’t realize there were so many angry former employees, but knowing that would not be a reason to not ask questions about whether the town was getting what it hoped for in the deal.

    Blogging can be an ugly business, but somebody has to do it.

41. 

    Chris Jones

     /  August 14, 2013

    ” I don’t see how you can infer recklessness (all facts are attributed)”

    But all opinions with no, or unnamed sources, are not:

    “But 3 Birds evidently has struggled recently. Earlier this year it lopped off its top-salaried employees and replaced them with lower-paid workers.”

    While I don’t always (or, lately, usually) agree with some of your opinion postings Nancy, and understand that this is your blog and, therefore, your right to write what you want and to police it as little or as much as you want, my biggest disappointment is not the article, but rather that you allowed such a high quantity of reckless, anonymous, unsubstantiated mudslinging from posters.

    What could have been a good conversation (though, frankly, I think the article missed the mark as well) about the effectiveness of economic incentives in Chapel Hill (which, I, too, think we are too early in the process to actually measure), got lost in the noise of what seems to me to be petulant former employees (or, maybe, one for all we know) putting something online they’ll regret when they mature, and a couple of the typical “see I was right as usual, and knew it all along, but know no one wanted to listen to me” rants.

42. 

    Terri Buckner

     /  August 15, 2013

    Will,

    The sublease for the rental portion of the agreement was signed on December 1, 2012, a date which I verified. That’s when this deal became effective. Using Nancy’s numbers and her claim that all is due by the end of 2015 (36 months from contract date), I made a very simple back of the envelope calculation, again using Nancy’s figures supplemented by my own personal count of the number of parking spaces (26).

    The 9 months figure is where we are currently in the 3- year contract. BTW, anyone who has experience with contracts knows that the contract holder cannot randomly require performance reporting. The required reporting conditions should have been built into the contract on a specified timeline. If no performance reporting was included, the town cannot arbitrarily start requiring them without a mutually agreed upon addendum to the contract.

    Your comment about your taxes vs mine is not entirely accurate since Orange County put up the bulk of the funding for the sublease. The town has very little capital invested.

    One more point. At $42.50 per month per parking space, 3 Birds isn’t exactly getting a deal. That’s more than than the so-called low wage earners (Nancy’s claim) would pay on campus. Since the lot was intended for hourly parking, the town traded a variable revenue source for a fixed one. Given the location of the lot, I think there’s a strong probability the town is actually benefitting financially on the deal.

43. 

    Diogenes

     /  August 15, 2013

    reckless, anonymous, unsubstantiated mudslinging

    petulant former employees putting something online they’ll regret when they mature

    “see I was right as usual, and knew it all along, but know no one wanted to listen to me” rants

    my goodness!

44. 

    Many

     /  August 15, 2013

    Its the anonymous part that bothers me……Quod licet Iovi, non licet bovi

45. 

    Bonnie

     /  August 15, 2013

    Unfortunately there’s not much of a local track record of successful public-private partnerships, and its amazing to see us move from an anti-business climate to incubators and other investments. Unfortunately most incentives offer little downside protection. We’re not different.

    It’s too bad that former employees chose to use this blog to bitch about their former employer. Often it’s difficult for low level employees to appreciate the challenges of management – and yes in small startups, leadership is often not as mature ( or bureaucratic) as corporate types. That’s the price of working for a start up. The saying goes “my ass, my way!” And with at will employment, people can leave at any time.

    All that said, given that town and county taxpayers are investing in local businesses, what is the process to see how it’s going and/or whether the investors expectations are being met? Certainly we’ve not agreed to micro-manage employee satisfaction.

    So – what’s the deal? does the town have access to 3 Birds’ financials? Is the business growing and/or are they planning to stay? ( less likely after this post). What was the town supposed to get inexchange for its concessions? How is it measured? And how is it going?

    BTW. – Looks like Raleigh’s incubator isn’t doing well. Makes you wonder what controls we’ve put in place.
    http://www.newsobserver.com/2013/08/12/3102665/close-se-raleighs-business-incubator.html

46. 

    Many

     /  August 15, 2013

    Bonnie,

    Really……? I seriously doubt any of this rises to the level of politics and deception described in the N&O article. The downside potential is of course; being paralyzed and not planning anything.

    Again; rather than jumping to micro managing 3 birds parking space logistics, I call for a discussion of strategy and tactics. It is far too easy to take “controls” to the point they are expensive and disruptive, let’s just step back for a moment. Rather than asking the Town & County “what the deal?” we should be asking “whats the plan?”….?…!…? Anyone?

    My biggest surprise and disappointment in this thread is not the criticism which is suspect, yet still table stakes, but that being a “new media” marketing company, 3 birds hasn’t taken control of the high ground in this discourse.

    My second big disappointment is that more government people in the know haven’t weighed in on the plan.

47. 

    Bonnie Hauser

     /  August 16, 2013

    Many – I was simply reacting to the apparent lack of measurement or controls. There’s no need to be heavy handed – but if the govt is going to offer incentives,there’ needs to be some way to determine whether its working – Doesn’t matter what you call it,

48. 

    Terri Buckner

     /  August 16, 2013

    “If the govt is going to offer incentives,there’ needs to be some way to determine whether its working.”

    But those measurements/controls would have had to be specified in the original contract. They cannot legally be imposed after the deal has been signed (without agreement by all parties), nor should they be ethically.

    I know a fair amount about this project but not this particular detail. What I do know is that the county is (or was) planning to set up incubators like LaUNCh in Carrboro and Hillsborough. If you believe performance measures are required along with specific reporting dates, then you need to talk to the county about that requirement in advance, not after the fact.

49. 

    Many

     /  August 16, 2013

    Terri/Bonnie

    Agreed. Need to know if its working, but I think that conclusion can be arrived at without being heavy handed or putting a lot of conditions in some contract. In most cases, you get what you measure. If the county knows what it wants to achieve then the measurements should be in place already and be independent of any specific agreement.

    I am frustrated by the complaints I hear from elected leaders that they do not get sufficient citizen feedback on projects, programs and ordinances until its too late.

    Forums like these are imperfect but if you filter the noise, a far more in depth conversation is achievable than in the monthly meetings. One can take days to formulate a response and that response can be much better informed and thought out.

    Sadly, I suspect the leadership secretly prefer the dais and its asymmetrical separation from the inconvenient.

    …….So, what is the plan?

    …….Sorry, your three minutes are up.

50. 

    Mark Marcoplos

     /  August 17, 2013

    Many,

    Thanks for the Zen koan. I have now decided to treat as credible only those statement made anonymously. In fact, I have decided that the safest strategy is for me to adopt the same name as an anonymous poster. This will give me double-protection from the surveillance state. If they ever found out my perspective on 3 Birds, my life could be ruined forever. At any rate, when you see a familiar anonymous handle, remember it could be me — but only if I am myself which is, as Many has revealed, unlikely.