Estimated reading time: 11 minute(s)
San Francisco-based startup Covo recently acquired the historic Mississippi Valley Trust building in downtown St. Louis as part of their global expansion plans.
The acquisition represents the first leg in an important moment of growth for the young startup. So naturally, it was with both confidence and trepidation that they chose to land their first step in St. Louis.
Ginger Imster, Vice President of Innovation and Entrepreneurship at the STL Partnership, often says that the renaissance of entrepreneurship in St. Louis is driven by the confluence of three intangible values, “People, Place and Purpose.”
People, Place and Purpose is a fairly unusual pitch. Mission-driven values are not necessarily instrumental in the next move of a company, despite research that strong values ultimately lead to strong startup valuations.
Cities typically attract companies to their region through conventional strategies such as economic incentives. For example, low taxes and land rights. That values may coincide is convenient but it’s rarely a motivator.
However, for Covo, despite strong economic incentives — such as the comparatively low cost of real estate in downtown St. Louis — the tipping point in their decision to move here was more about philosophy than economics.
EQ spoke with Covo’s co-founders, Rebecca Brian-Pan and Daniel Brian, and Director of Coworking, Alex Anderson, on why they chose St. Louis.
Sitting down with them over cocktails at the Three Sixty rooftop bar in the Hilton, I learned that they’d fallen in love with the opportunity to stand for new possibilities in a city that had engaged in the hard work of reckoning with its past.
For the Covo team, relocating their business to St. Louis really was about people, place and purpose.
Rebecca Brian-Pan, CEO and co-founder of Covo, explained to EQ, “Originally, we were looking at other cities, but then our lead investor suggested St. Louis a couple of times. Initially we weren’t sure whether it made sense from a real estate perspective. But we mentioned it to Alex, and he said, ‘Guys, St. Louis is awesome. We should totally open a new space there.’”
Yet, beyond that, the founders didn’t have a real connection to the city.
“Alex often has these weird intuitions.” Daniel Brian, COO and co-founder of Covo, chuckled at the retelling of the story.
“So, our lead investor and our lead community manager reckon we should make a trip,” Rebecca countered. “That’s two votes for St. Louis. We have to at least make the trip.”
They came, they saw, and they… discovered the Mississippi Valley Trust building.
When the team learned that the Mississippi Valley Trust Company originally funded the 1904 World’s Fair in St. Louis, they knew they had found Covo’s new home. The historic purpose of the building mirrored their own sense of destiny.
That moment of choosing where to establish Covo’s second-ever coworking space, was not just an act of faith — betting on the innovation community in St. Louis — but also an act of restoration — a moment of taking up the mantle of history, to restore a sense of provenance and renew a sense of purpose to the historic Mississippi Valley Trust Company building.
“We were looking for three things. An excellent and thriving entrepreneurship scene. A phenomenal real estate economy. And, put simply, room to grow,” Daniel explained.
“There are lots of amazing coworking spaces here already, but it is not an over-saturated market. The metro area is 2.8 million. If you were to look at a similarly-sized market like Denver or Austin, we would expect the city to have double or triple the number of coworking spaces that St. Louis has currently. So, there’s room. There’s room right now for Covo.”
Yet, in spite of positive market conditions overall, there was less confidence at a neighborhood level. When looking for local assurances on their most likely choice of a downtown location, they were met with some ambivalence, Daniel told EQ. Local confidence seemed low.
“We visited at least 4 buildings in Laclede’s Landing, mainly because the buildings were beautiful and we just couldn’t believe how affordable they were. At each building we met a weary, beleaguered-looking real estate agent and asked them what the catch was — ‘why are these buildings so cheap?’”
“They each reported, ‘well, people don’t really come down to the landing anymore. And those people that did come downtown, can’t anymore, because of the Arch construction project.’”
“So, we asked them quite directly,” Daniel said, “‘would it be a good place to open a coworking space?’”
“The best answer they could offer was, ‘Maybe.’”
Thankfully, the Covo team answered that question themselves – by drawing from their own experience.
Every new coworking space faces a systemic challenge around ‘discoverability.’
WeWork — the unicorn of coworking startups — essentially solves this problem through economies of scale. Coworking gets more profitable the larger your space is because the balance of costs, labour, and services, don’t go up as quickly when you get a bigger coworking space. Furthermore the costs of running multiple locations are offset by the network effects of access to the market through multiple locations — much like the business model behind gym membership.
However, the problem with scale is that very large spaces can be anathema to building a sense of community. A giant space can erode the community connection that many people have grown to love about coworking.
Covo eschews scale in favor of generating multiple sources of income from a single space. Put simply, instead of spreading their costs by expanding, they increase revenue with a multi-purpose building.
It’s a qualitatively different business model to WeWork, as discovery and profitability are built into the efficiencies they can create across multiple revenue streams.
So, for example, in St. Louis, the ground floor of Covo #2 provides public retail space that is open to everyone and includes a Kaldi’s coffee shop, a full bar, and access to hotdesks and meeting rooms by the hour. Covo’s drop-in policy allows guests to access coworking amenities for as little as $2/hour.
This approach allows Covo to create smaller spaces that are not solely reliant on member dues. Furthermore, the combined effect of pairing multi-purpose units with a diverse suite of product lines actually augments the critical community development aspects of coworking.
The drop-in culture that the public retail space facilitates not only solves the exposure problem that affects the coworking industry in general, but is also a value-add to the city and surrounding area because it creates an opportunity to generate local economic impact.
From day one, in the heart of the SOMA district in Downtown San Francisco, Covo made it their mission to wholeheartedly support the 27 non-profits located within a five-block radius from the space.
Coworking has this ivory tower problem,” Alex Anderson, Director of Coworking told EQ. “A members only club. All these cool things can be happening, from new friendships to marriages, even. But no one knows what is happening in there — it doesn’t transcend the four walls of the space.”
Alex explained that the team started to ask themselves some existential questions such as, “what does community mean in general? Can you really isolate it? Is it fair to say, we have a strong community but it stops the second you walk out of the door?”
The team’s answer to their soul search was to design a retail space on the ground floor of Covo SF, serving coffee and drinks from a huge coworking lounge open to the public. As intended, the new retail space solved the aforementioned discoverability problem and became an effective new source of fresh faces and revenue.
Nonetheless, it was surprising how instrumental the space was in helping the local community organize themselves more productively.
“The community became the street outside our door,” Alex continued. “We became part of the entire neighborhood. We started to meet people and got connected with the cultural district, which for us, was the Soma Pilipinas. Just as San Francisco has China Town and Japan Town, they’d been working to create their own cultural district.”
“We were able to donate space to them. They’ve organized meetings with business leaders. Restauranteurs. Makers of all kind. They brought all these people together, who’ve never had the opportunity to meet and use a coworking space.”
This year, the Soma Pilipinas launched their first ever creative night market at the Old Mint Building. The entire project was planned at Covo. Now, the night market runs every third Friday of the month under the name, Undiscovered SF. That’s a huge achievement in community organization.
“They were expecting a few thousand to attend and they exceeded over eight thousand people,” Alex reported to EQ. “They recently told us that we’ve singlehandedly been the biggest contributor to their success.”
“It gives me goosebumps just thinking about it, but that’s why I fell in love with coworking. These little conversations might seem insignificant at first, but they create incredible bonds that can generate the confidence to launch their own initiatives. There’s a snowball effect.”
Discovering New Possibilities In St. Louis
After connecting with the local hispanic, black and asian regional Chambers of Commerce through the STL Mosaic Project, the Covo team found that the city of St. Louis, “evangelizes demand for minority and diverse founders.” This perfectly meshed with the values of their own startup, Daniel told EQ.
“It’s a goal of ours to be here to provide space for people who haven’t previously had access. It allows people who may not have ever been exposed to coworking the opportunity to learn more and, hopefully, join and contribute to the community at some level.”
Their conviction that similar outcomes are waiting to be discovered in St. Louis is not naive idealism or blind belief, but a true purpose developed through real experiences.
“On an emotional level, we truly believe that a strong sense of community in a downtown neighborhood is the beating heart of a great city. Our model is built upon inclusivity and diversity, and downtown areas have that in spades, allowing us to make a real and lasting impact. This is why we put Covo downtown in San Francisco and St. Louis, despite all of the challenges in doing so, and why we couldn’t imagine doing it anywhere else.”
The community impact of Covo’s work in San Francisco exemplifies the existence of a phenomenon that the German modernist philosopher, Martin Heidegger, metaphorically describes as ‘a clearing’.
According to Heidegger, the inherent emptiness of a clearing — that space and openness — simultaneously illuminates our shortcomings and differences while playing a catalyzing role in fulfilling the expression of ourselves as human beings.
“In the midst of beings as a whole an open place occurs. There is a clearing, a lighting… Only this clearing grants and guarantees to us humans a passage to those beings that we ourselves are not, and access to the being that we ourselves are.”
Alex’s experience shows that space isn’t inactive. It’s actually a catalyst.
It was the actual emptiness of the space that Covo provided in the Soma district that enabled the Soma Pilipinas to organize so successfully. The Filipino urban core was already there, but it was space that afforded those community members time to concentrate and coordinate their efforts.
In philosophical terms, one might say that somehow the Soma Pilipinas’ voice in the community was both simultaneously present yet also in need of discovery. In scientific terms, one might observe that all the elements of success were already present, but dormant and in need of an accelerant.
That catalyst was Covo’s open door policy which transformed their own space into a destination for the Soma Pilipinas to gather around an idea – to formally sit down and hatch plans. The role of space as a catalyst was to elevate and accelerate the values already present in the community on their doorstep.
Excavating Historic Values From The Psyche Of The City
Transforming the city’s relationship to space has been a catalyst for entrepreneurship in St. Louis once before.
The location of Covo’s second coworking space in St. Louis is particularly apt because — as a Google Doodle illustrating the World’s Fair shows from that era — so many of the ‘modern’ technologies that were on display then, one hundred years ago, are now cornerstones of contemporary life.
And it wasn’t just cameras, carriages, crystals and clocks on display in St. Louis. There were type-writers, sewing machines and a grand display of the illuminating power of electricity too.
Though debunked now, 1904 World’s Fair is also widely credited as the source of many origin stories of iconic American foods. Fast food was needed to serve the 10 million attendees, so their product became well known and word spread fast. From the hotdog to the hamburger, from iced tea to the waffle cone. These foods became symbols of modern culture.
Yet, as Serious Eats writes, such origin stories stick to St. Louis because that’s when food entrepreneurship became “a thing” – there was a recognizable shift in the culture of eating. Remarkably, many of the latter day fast food founders were immigrants too; German and Syrian born.
The event came at a time when European empires were gradually withdrawing from colonialism. The British had adopted the foreign policy of Splendid Isolation and the United States — a nation born of outsiders retreating from Europe — was in political ascent on the world stage.
The doors of the nation were open.
Just like the Epcot center in Disneyland today, the St. Louis World’s fair was a cultural feast of food, fashion and founders. Forty-one states hosted exhibits and forty-three countries built their own pavilions.
“Ireland’s resembled Blarney Castle, India’s was a replica of the Taj Mahal,” wrote STL Today. And it’s an uncanny coincidence that, “The biggest spread, west of today’s Skinker Boulevard, was that of the Philippines, America’s new colony.”
Covo’s doors are now open to new members who bring the same spirit: Whoever they are and whatever they create.
“At the start of the 1900s the people working in this building were on the cutting edge of innovation. Now St. Louis is again in the middle of an entrepreneurial renaissance,” said Rebecca, quoting their press release. “Covo members who work here are going to be in the thick of it.”
People, Place And Purpose
There’s a tendency to think that startups always bring something unequivocally new to the market in whatever they pursue. There’s a tendency to evangelize innovation as providing something inherently new when, in reality, the new technology is just a substitute for the old.
In a practical sense, most innovation is simply an old system reinvented in a new technological environment. Modern technology especially is narrowly optimized for a specific task or maximized to the point of abstraction. Google is a virtual library. Facebook a virtual phone book. Amazon a virtual shopping mall. Uber a virtual taxi dispatcher. Tinder a virtual bar. The core functions of all those platforms simply substitute the systems that existed before.
While every tech journalist wants to frame a new startup as the embodiment of all that is new, there’s a certain omission we must engage in, in order to present the story as such. One can’t write that Google is planning to replace the Library or Uber just digitized taxi dispatchers, for fear of being a labelled a luddite and because, well, if it’s not new, it’s not news.
In the case of Covo, while there may always be innovation in the business model of coworking, it’s inherently hard to convince anyone that space itself represents innovation.
Yet what I’ve discovered in talking to the Covo team is a rare example of what “being part of something” could actually mean beyond ideas and incentives. To me, the founding values of Covo STL represent the grounding of Heidegger’s idea of a clearing, the transformational function of space and the possibility of excavating historic social values that could make a real impact today.
In their story of moving to St. Louis, I am gladly reminded of core values that have been instilled in me and other outsiders too, through the innovation ecosytem across the entire region.
The story is the energy that this old city represents. Potential we all feel. A drive that many of us share when we choose to relocate our businesses here.
“We’ve noticed that there is so much insecurity about entrepreneurship here. And about being here. St. Louis doesn’t need to have it anymore,” Rebecca shared. “Coming from San Francisco, this is my 11th space. It is a really legit market and people should just be happy to come here and own it. And go from a place of strength. Because there are things here that San Francisco and New York don’t have. There’s things here that really matter. It’s full of thoughtful people. They’re not rushing so fast that they don’t have time to think things through.”
It strikes me that here is a startup whose purpose in St.Louis is to restore rather than disrupt.
So I don’t think it’s an exaggeration to say that, “bringing Covo to our city,” could be considered shorthand for the vindication of all the entrepreneurial values that the STL Partnership hold dear.
Ginger Imster echoed my own conclusions in an email.
“Covo expanding their network to include St. Louis amplifies St. Louis’ strengths.” She wrote.
“Covo coming to St. Louis is a point of validation for all who have put their time and money into creating a culture of innovation and entrepreneurship in our region. All of our region’s startups should take pride in their role in shaping a new narrative about St. Louis – one that is poised to make St. Louis an inclusive community with a more resilient economy. We’re thrilled they want to partner with our region to amplify our strengths and support our next generation of entrepreneurs and civic leaders.”
Covo’s story is our story. Their confidence is our confidence. That, as newcomers and outsiders, we may dare to write our own narrative from the history of St. Louis. And that together we can expect to become greater than the sum of our parts.