Speakeasy

[Steve]

x-no-archive: yes

======================

Cyber cafe reboots

Carol Tice
Puget Sound Business Journal 7/26/99


As the Speakeasy Cafe comes back online, owners Gretchen and Michael
Apgar are leveraging private financing to expand the parent company
into several other markets. 

The Apgars' Speakeasy Network, a Seattle-based Internet-access
company, generates most of the firm's revenues. But the Apgars are
best known for the computer-intensive Speakeasy Cafe, a popular
gathering spot for the Net community. 

Recently the Belltown cyber-cafe ran afoul of a city ordinance
regarding holding all-ages events that offer both live entertainment
and liquor. The Apgars weathered a one-month closure and spent $25,000
to remodel their establishment, whose food offerings will now be much
more limited. Ironically, the ordinance in question was recently
nullified, but too late for the Speakeasy to change its plans to
eliminate live music. 

The couple were able to take the financial hit on the cafe thanks to
the success of Speakeasy Network. "Ninety percent of our income now
comes from the Internet business," Michael Apgar said. 

The 3 1/2-year-old online venture provides Internet access, e-mail,
domain hosting and digital subscriber lines, which give home-based Web
surfers reasonably priced, high-speed Internet access. The company
currently has about 5,000 subscribers, and has grown at a steady rate
of 40 percent or more each year, Apgar said. 

Besides the cafe, Speakeasy Network offers 20 other "public access"
sites around the Seattle area for subscribers who don't own their own
computers, or who want to be able to pick up e-mail from remote
locations. 

In June, Speakeasy Network completed a round of private financing,
the size of which Apgar characterized as under $1 million. This
initial seed money for the expansion of Speakeasy Network came from
two "angel investors," whom he declined to name. 

Perhaps the anonymity of the investors gave rise to local rumors that
Speakeasy Network was being bought out by a heavyweight competitor.
America Online and Paul Allen were two names the Apgars heard
mentioned. But Apgar said the company was never looking to be
purchased, and wants to retain its independent status. 

The money was sought to fund a national rollout of the company's
services, which began this month. San Francisco and Portland, Ore.,
are the initial targets. 

A marketing campaign encompassing radio spots, transit billboards and
Web-based advertising is under way, Apgar said. Eventually, 18 cities
will be included in the expansion plan, including Phoenix, Denver, San
Diego and Los Angeles. 

Factors that differentiate Speakeasy Network from its many rivals are
its public-access feature and its customer service level, according to
Apgar. With a background working for Airtouch Communications and
Airborne Express, Apgar said his company is more customer-focused than
many competing providers. 

"We reply to e-mail within 24 hours, more usually within 30 minutes,"
Apgar said. "It's a culture that developed with the cafe. We're used
to having a customer standing in front of us, wanting an answer now.
We've heard it's nice to come into a comfortable environment, instead
of waiting on an 800 number for tech support to answer." 

At this point, the cafe essentially is a promotional vehicle for
Speakeasy Network and a primary access point for subscribers. The
Network employs 23 in an office up Second Avenue from the cafe, while
the cafe itself now has just a couple of employees on duty at any
given time. 

With the cafe remodel, live music was eliminated, and so was the
cafe's full menu. Now just pastries, snacks, beer, wine and coffee
will be offered, Apgar said. The cafe's schedule of arts events, film
screenings and spoken-word performances will be doubled. 

"We're also putting in a couple of large tables for nonprofits and
businesses to hold meetings," Apgar said. "It's a great place if you
need Internet access for your event." 

While cafe revenue will clearly be lost, the changes also meant
reductions in operating overhead, Apgar noted. The cafe used to have
two employees, plus a doorman and one person on the Internet help
desk. With the elimination of live music and food, that shrank to one
cafe employee and one on the help desk. 

Reaction to the cafe's new configuration has been positive, Apgar
said. More than 150 patrons had sent e-mails to the Apgars pleading
with them not to close after their live-music troubles surfaced in
March 1998. Many of those patrons jammed the Speakeasy's reopening
party, held July 9. 

"We didn't know if anybody would show up, and 25 people were already
standing at the door waiting to get in at six o'clock," he said.
"E-mail is easy to send, but this meant a lot." 





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