Shaker LaunchHouse Partners Respond to Criticism

Misinformation is nothing new to Dar Caldwell and Todd Goldstein. The guys say they have dealt with it since Shaker LaunchHouse opened in June 2011.

The two most visible partners of LaunchHouse's five-person ownership agree that the notion that the city government handed them money is the most frequent and incorrect comment they hear.

"One of the misconceptions is, 'the City of Shaker Heights gave you $500,000,'" Goldstein said in an interview this week at his office. "The City of Shaker Heights has never given us any money that wasn't reinvested back into their own building.

"The only money we've ever received from the City of Shaker Heights was a $50,000 grant, but not only did that $50,000 grant go back into reinvesting in this building, but on top of that, we reinvested close to $60,000 of our personal money and investors' money back into this building."

Shaker LaunchHouse, its collection of portfolio companies and entrepreneurs in need of a workspace are tenants of 3558 Lee Road — the old Zalud Oldsmobile Dealership, which the city owns. Officials originally planned to demolish the building, until Goldstein and his partners sold them on the LaunchHouse concept in the fall of 2010.

"Our position to the City of Shaker Heights was, 'take that same amount of money you were going to use to knock down that building and reinvest it in the building and give us five years tax- and rent-free to show you that we can get people to move their business to Shaker Heights and build their business here and people will want to come here,'" Goldstein said.

The group is in the middle of proving their idea can be a success, but that hasn't prevented online users and people in the community from believing that LaunchHouse is simply collecting money from the coffers of a city that recently returned to its voters for more income tax money.

Caldwell was visibly frustrated when asked about those opinions.

"It's hard for me to even respond to it because it's so far from reality," he said. "Have they been over to the space? Do they know where the dollars have actually gone? It's not to our operations."

Caldwell contends that LaunchHouse attracted several entrepreneurs who "never in a million years" would have considered operating out of LaunchHouse.

"We've already seen companies go from nothing to millions in revenue," Caldwell said, likely pointing to Good Greens, easily LaunchHouse's most recognizable tenant. "We've seen $5 million invested in these companies and that's only going to go up."

Goldstein added that the Shaker Heights Development Corp. owns 3 percent of LaunchHouse.

"The 40 companies we've invested in, at some point some of these companies are going to sell," he said. "The Shaker Heights Development Corp., they will get a 3 percent distribution, based on our return. On top of that, the Shaker Heights Development Corp., starting in June 2011, they get a percentage of whatever we get. If we take a 10 percent equity stake in a company, they get a 1 percent interest in that company."

However, Goldstein pointed out that if he and the team left Shaker, the building that the city has put its money into stays.

"The equity we've given Shaker Heights Development Corp. also stays, it doesn't go with us," he said.

"We firmly believe that when people start going against you, it's really because you've done something right."