<aside> 📌 Powderhouse is a small, tuition-free lab school and R&D group in Somerville, MA. For the past two years, beginning with a gap-year program, we’ve been prototyping that lab school after several years trying (and failing) to launch an in-district high school, and before that, developing a wide variety of youth and adult programming, professional and curriculum development projects as sprout & co. We’re now at a stage in our development that we are considering purchasing a building to expand our campus and operations. This document aims to summarize our best understanding of that question.

It is only a draft, and aims to summarize the situation and our approach to decision-making. Please contact [email protected] with any questions or suggestions.

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tl;dr

• There is a great-and-relatively-rare property which is a great fit for our use case, a perfect location, accommodates ample expansion for the full scale version of Powderhouse at the high school level, and which we believe we may be able to purchase at a below-market rate.
• We see many important advantages to this space as it affects our model, operations, legibility, and credibility.
• The primary hesitation we have is about the financial impact on the organization, and specifically the impact the purchase would have on:
  • our focus if we need to invest substantially more time into fundraising in the next 3–4y, potentially in advance of our landing our exploration of how to best demonstrate and tell the story of what is most interesting about our work,
  • our ability to explore and prototype hiring and development of faculty (a core design question in the coming years)
• We do see several plausible paths to responsibly financing the property, but are still undecided as to the relative weight to assign our primary hesitation (about runway, focus, and talent development) versus the many operational and optics advantages the space itself offers.

When to make the decision?

If we are interested, we believe we should move quickly (within the next week) to make an offer. Though the current asking price is quite high, the property is very desirable and has already been on the market for more than 90 days.

Once we make an offer, we’ll have at least 30 days to perform due diligence (and another 30–60 days to investigate or address any issues discovered during that time), during which at any point we will be able to withdraw our offer for any reason.

How to make the decision?

Relative to Powderhouse’s mission, we see three, primary dimensions (with many pros and one big con) to the decision

1. Permanence ⇒ How does this space help us sustain our work for the long term? We see two, opposed components:
   • Runway ⇒ $2.5M amounts to ~8y of runway at our current costs, and more importantly, is ~40% of the endowment we would require to be able to sustain our current operations indefinitely.
   • Space ⇒ Currently, we spend ~$35,000 on rent each year, and often have to negotiate to make space modifications (in addition to papercut quality of life issues like persistent boiler problems). However, our bigger concern is the eventual possibility that we would be displaced as Somerville property costs rise (and/or as our largely absentee landlords find that they’d like to pass on the house and carriage house—or its sale proceeds—to their children).
2. Operations ⇒ Right now, we are limited by space in four, primary ways:
   • Small group and meeting space ⇒ Most acutely, the absence of varied, acoustically and visually separate space to support meetings; small group gatherings and workshops; and private space to set up temporary project workspace limits what we can do in the space on daily basis, especially since such a large proportion (~30%) of our space is currently devoted to general workshop space.
   • Scale ⇒ We are near capacity in our current space, and frequently run into challenges with project storage, group gatherings, and similar. We expect that we might be able to push our space to 25 people full-time, but nowhere close to the 30–40 we expect will comprise one cohort in Powderhouse’s full model. 115 Willow is ~8,000SF, which would be a comfortable ~200SF/person for a single cohort. Were we to expand on 115 Willow (cf. Expansion), the four stories which we can by-right build (cf. Permitted Uses) would allow us to grow to our full scale over time.
   • Projects ⇒ There are a variety of larger scale personal and group projects which we simply can’t accommodate in our space because there isn’t even 100SF which we could occupy for more than a week or two on end. Beyond this, having a space on a main pedestrian thoroughfare with ample open space on the adjacent Community Path and potentially on the unoccupied lot across the street opens up many opportunities for much more interesting and substantial projects for youth and the community (e.g. pop-up shops, gallery showings, public events, etc.)
   • Tone ⇒ Our current space is beloved of many youth; however, it also has a distinctly familial, club house vibe which can detract from the professionalism and energy expectations we are seeking to amplify in the program.
3. Optics ⇒ Most fuzzily, based on conversations with advisors and partners, we see three audiences for whom a new space might represent an important advantage. In all three cases, the optics of permanence and credibility are the primary mechanism:
   1. Families ⇒ Potential families often comment on our current weird garage space at 339R Summer Street. It has character, but for most families, we believe it represents a credibility gap to overcome (which we regularly do). We expect a permanent, attractive space would go far in rendering Powderhouse more legible, which we expect will be more important as we grow younger and pursue accreditation. Additionally, the fact that 115 Willow is right on a main pedestrian thoroughfare (the Somerville Community Path leading, among other things, to the Alewife, Davis, Gilman, and Lechmere MBTA stops) would offer a valuable, constant marketing opportunity.
   2. Talent ⇒ We also expect the permanence, credibility, and quality-of-life entailed by a nice and more legible space would offer a significant plus for recruiting great talent.
   3. Funders ⇒ And finally, we expect that a mixture of the permanence and seriousness suggested by owning our campus and the associated credibility boost may make future fundraising easier (ironically).

Why not?

With so many positives, what’s the best reason not to pursue this opportunity?

Money. Or really, time.

Specifically, we can operate at our lean, tiny scale at the moment ~indefinitely, and there are plenty of important, essential questions and problems to tackle which are not limited by space. After the Somerville rejection, we felt it was important to avoid having any external party on our critical path ever again, and the general posture of (a) do good work, (b) at a small enough scale to survive forever, and (c) only grow out within the constraints of permanent capital/endowment is a very appealing one, given how rare and unusual our work and its legibility is.

Financing