There have been some infrastructure changes at Enfrastructure Inc.
After a year of lukewarm response to its business of building and running high-tech campuses for startup companies, Aliso Viejo-based Enfrastructure has restructured its business, including layoffs and strategy changes, said company founder Scott Blum.
“We weren’t filling the goals that we set at the beginning,” Blum said. “We’ve had to make some difficult decisions.”
In the past two months, Enfrastructure slashed its staff of 60 by half. Blum declined to comment on which positions were eliminated with the layoffs, except to say some of the positions had redundant duties. During Enfrastructure’s launch last year, company executives overshot their hiring needs, Blum said.
“Our first mistake was that we had too many people to fill the jobs we had,” he said.
In tandem with the staffing cuts, Enfrastructure executives no longer plan to build new campuses like the one in Aliso Viejo. Instead, the company will lease existing buildings, fix them up with high-tech amenities and sublease spaces to companies.
“We found that it didn’t make sense to have a building on the balance sheet,” Blum said. “This will allow us to more quickly enter markets.”
When they set out last year, the partners behind Enfrastructure had a clear idea of what they wanted to build: a network of campus-like facilities for companies,and especially tech start-ups,to set up shop in. The sites were to feature Internet-connected offices, personal computers and Web servers from IBM Corp., software and services from Microsoft Corp. and tax and accounting services from Arthur Andersen.
The venture faces competitors that are further ahead in geographical expansion. TechSpace Inc., based in New York, provides offices already hooked up with tech services and even offers access to venture capital through its own partner company. TechSpace, which was founded in 1997, has similar campus-like facilities in San Francisco, Austin, Boston, Toronto, Miami and London.
Enfrastructure had planned to open campuses in New York City, Northern California and Colorado this year and start its European expansion by now. Instead, the company has downshifted to concentrate on filling its lone Aliso Viejo campus. Three months ago, Enfrastructure had only a 30% occupancy here. Now the company has 70% and is on track to be 100% full by the end of the year, according to Blum.
The changes at Enfrastructure mark the second time this year the company has undergone a strategy shift. Earlier, Enfrastructure started courting non-technology businesses for the Aliso Viejo campus after a drop-off in venture capital investments reduced the number of startups to nearly zero. The company now has tenants ranging from landscape architects and building preservationists to personal-injury law firms.
Another change: Enfrastructure started leasing out storage space in its data center to companies that weren’t tenants. Enfrastructure had originally expected its tenants would take up most of the space in the data center, but has had to rent out space to help fill it up. n
