#245 Anne Hartnett (HCO Partners, Harness Cycle, The Vitrolite) — Brick and Mortar Entrepreneurship and Neighborhood Revitalization

Anne Hartnett [00:00:00]:
And within 2 minutes, the first 3 classes that weekend, our opening weekend, sold out. And I was like, oh man, okay. It wasn't about fitness. It, it was about this identity of young active people gathering together and moving together and then like going back out in the city at the end of that 45 minutes and doing something great.

Jeffrey Stern [00:00:24]:
Welcome to the Lay of the Land podcast. where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host, Jeffrey Stern, and today I had the real pleasure of speaking with Anne Hartnett. Anne is the founder of Harness Cycle and the CEO of HCO Partners, a Cleveland-based neighborhood development and placemaking company rooted in brick and mortar storefront activation. Anne began her career as a software consultant at Highland Software here in Cleveland, but ultimately decided to pursue a different path, opening a boutique cycling studio in Cleveland's Ohio city neighborhood. In 2013, she launched Harness Cycle, built around the idea that movement can bring people together and serve as a catalyst for community. What began as a small storefront quickly became a neighborhood anchor during the revitalization of Hingetown, and eventually expanding to a second location in downtown Cleveland in 2017. When COVID forced both studios to close in 2020, Anne began rethinking not just the business of fitness but the economics of brick-and-mortar entrepreneurship itself, focusing on ownership of the physical spaces where her businesses operate.

Jeffrey Stern [00:01:35]:
That shift ultimately led to the founding of HCO Partners and the redevelopment of the Vitrolight building in Hingetown, now home to many locally owned businesses, including Harness Cycle, Soul Yoga, Patron Saint, The Matriarchy, and Luma Wellness Suites. In our conversation, Anne and I explore her journey through entrepreneurship, the early days of Harness Cycle, the role of brick and mortar businesses play in a neighborhood revitalization effort, and why she believes small businesses often create enormous value for communities without sharing in their upside and what they can begin to do about that. We also discuss the Vitrolite project, the future of storefront entrepreneurship, and Anne's vision for creating systems that make neighborhood revitalization and wealth creation more repeatable across Cleveland. Anne is building a thoughtful and economically viable model for how community entrepreneurship and physical spaces can reinforce one another, and I very much enjoyed exploring it with her. I hope you enjoy this conversation as well. Lay of the Land is brought to you and is proudly sponsored by Serity Partners. As a wealth management firm, Serity Partners shares Lay of the Land's same dedication to serving local business owners, and the Serity Partners Cleveland team understands the challenges that entrepreneurs and founders face here in Cleveland, Northeast Ohio, and beyond. Wealth comes with complexity and increased demands on time and resources.

Jeffrey Stern [00:02:57]:
It is easy to become overwhelmed. Serity Partners clients benefit from a unified team of local specialists who coordinate across both business and personal needs. With Serity Partners' commitment to transparency and putting clients' needs first, complexity can become clarity. To learn more, please visit seritypartners.com or call 216-464-6266 today. Serity Partners. Proud to be recognized as one of the top financial advisory firms in the country.

Speaker C [00:03:29]:
Yeah, I don't mean to ground the whole conversation in the idea that entrepreneurship requires vulnerability and is hard and heavy, but it, it is top of mind given that's what we were just talking about. I guess knowing what I know about who you are and the diversity of entrepreneurial things that you're building and have built, knowing where you started from a career standpoint, as a solutions engineer at Highland Software, I don't know that you'd be able to anticipate, you know, that you'd have embarked on this path. And so obviously there was a moment where you decided to make that transition and deviate from what many would consider a more traditional kind of job and lean into this inclination within and chart your own entrepreneurial path. And I always love to understand what that what that fork in the road was for you.

Anne Hartnett [00:04:20]:
Yeah, my mom certainly wanted me to stay in that traditional trajectory initially, but she's very proud of me. Yeah, anytime someone asks this question about, you know, the change from, from where I was in a corporate career to, to Harness, I think for one, I always give a ton of credit to Highland Software. In being not just an innovative company, but the culture when I was there was incredibly entrepreneurial. And even within that, you know, you were given a lot of opportunities at a very young stage of your career to be a thought leader and give ideas. Um, and so I always give a lot of kudos to Highland Software and the culture that I was part of there. And, and very much they encouraged me to cultivate the idea that I was trying to create with Harness Cycle when I did. I don't know. I would say like most entrepreneurs that I feel like it's in their DNA, um, you can look back to an early age most likely.

Anne Hartnett [00:05:28]:
And it, it wasn't like this moment that happened in my 20s. You know, my friends in high school were always telling me I was scheming or like coming up with what-if ideas and not always from a, um, from a revenue standpoint. I wasn't, wasn't entrepreneurial in that way, but just kind of always thinking big picture and vision. Um, and, you know, when I was in, I think, 8th grade, I grew up in Lakewood, um, and there's like a little beach community that my neighborhood was part of. And there was a long-standing beach, it was called Beach School, and it was like a babysitting camp for 2 hours in the morning. Parents could drop their kids off. And I was like, I think we can uplevel this. So I like raised the rates.

Anne Hartnett [00:06:12]:
I like bought supplies. We had field trips to just like walk to the local McDonald's for lunch. So I think I can look back from a very early age and see just how my brain kind of works in that way of looking at opportunities and then pursuing them. And so for me, when it was creating Harness Cycle, which is the first business I started, which I'm sure we'll talk about. Um, I actually had no intention of leaving Highland Software. Um, I thought it would be kind of like a nights and weekends side business because I really just wanted to be part of the fabric of Ohio City's emerging small business scene. I wanted a fitness studio near my house and thought this was something I could manage on the side. Um, and it very quickly took off.

Anne Hartnett [00:07:04]:
From really our first classes and something had to give and it wasn't going to be the business that I had just started. So it wasn't maybe a conscious decision that I was going to leave corporate and go full into entrepreneurship. It was kind of a forced leap at that moment in time, which I'm very grateful for, but there, I would be lying if I didn't say there were many points of hard throughout the last 13 years that I was like, Why did I do this? Why did I not stay on that path? But here we are.

Speaker C [00:07:39]:
Here we are. And, and we'll spend the next hour or so unpacking all that. What did you feel was interesting and attractive about the fabric of Ohio City as you saw it as the, the place to build this? And, and what did you feel the opportunity was?

Anne Hartnett [00:07:55]:
Yeah, so I, you know, I grew up in the Cleveland area. I grew up just west of downtown in Lakewood. Spent my summers doing outdoor adventure trips. So really didn't even spend my summers in Cleveland. In high school, I was like doing bike tours across the country and hiking trips and canoeing trips. And so, you know, I was probably the friend and family member everyone bet on heading out west after college. Mm-hmm. But found myself back home in Cleveland.

Anne Hartnett [00:08:25]:
I did get a job in software consulting, so I was doing implementations of OnBase all over the country. And so it kind of gave me that sense of travel, and I was seeing different parts of the country and decided that I really liked the idea of relearning Cleveland as an adult. You know, it's a very different experience. Experience growing up here than it is, you know, being an adult and, and finding your own way and community and spending your nights and weekends. Um, and so I loved, I loved being near family. Cleveland is a very affordable place to live and therefore travel elsewhere from. And so it quickly became, um, where I wanted to stay. In Ohio City at that point, it was 2008.

Anne Hartnett [00:09:19]:
So I had started my job and then the housing crisis began that year. And what led me to Ohio City was I actually purchased a foreclosure, my first house for $21,000 in Ohio City. And my now husband and I renovated that house and really reimagined this like tiny cottage in Ohio City. But that's Sweat labor, like that fun project that we had not just tied us to that little house, but like the, the little pocket of Cleveland that we fell in love with, which is Ohio City.

Speaker C [00:09:57]:
So what was it about the boutique fitness opportunity where, where I grew up there, there was a, I remember the moment that I saw the first SoulCycle.

Anne Hartnett [00:10:07]:
Mm-hmm.

Speaker C [00:10:08]:
And, and the moment it really like became a whole craze. And I'm curious how the broader trend intersects with your desire to have started this business and, and just how and what those early days looked like.

Anne Hartnett [00:10:23]:
So I mentioned we, we bought that house in Ohio City and fixed it up and it was our first house. And one of our favorite things to do was just go to restaurants, bars, and shops in the neighborhood. Yeah. At one point my husband was nicknaming me the opener, cuz if a new restaurant opened, I was like, we have to go, they're opening tonight. Which actually isn't always the best time to go to a restaurant there. Their first night.

Speaker C [00:10:44]:
You gotta, gotta let them figure it out a little bit.

Anne Hartnett [00:10:46]:
Yeah. I kind of just like organically became this champion for what was emerging at that time in like 2008, 2009. A lot of people had lost their jobs and so it became a little bit of the Wild West of small business brick and mortar because there were many people that were like, well, if now's the time to, you know, give this idea a try, it might be now. So. In the wake of like a lot of closures, we were also seeing some, some reemergence, um, and kind of revitalization happening post-crash. Um, and I just loved it. I loved seeing new businesses open and I think well before I knew what kind of business I wanted to open, I knew I, I wanted to be part of it in some way. I was a college athlete.

Anne Hartnett [00:11:37]:
Played Division I lacrosse. I ran marathons after. So I think for me, like fitness became a very natural pick of, you know, the scope of what brick and mortar could be. I mentioned I was traveling a lot. I got put on a 1-year project in Manhattan for a software implementation. And so I too observed kind of the start and quick growth of SoulCycle. Um, I had gone to I got snowed in. It was like a February, and I'm not even sure what year.

Anne Hartnett [00:12:10]:
Um, and the SoulCycle studio didn't even have a sign. It was like an old dance studio, 25 bikes. It was very tiny. So I had gotten snowed in, my flight had gotten canceled, and my New Year's resolution that year had been to do 45 minutes of fitness every single day that year. So I was like, I still gotta get this in. So I found Found the class, booked it, made my way there, and I just loved the experience of riding in the dark candlelight. It was, uh, music-based, not competitive, no metrics. And I was just like, what is that? I wanna do that again.

Anne Hartnett [00:12:49]:
Um, it didn't really exist in Cleveland. And so I started, um, looking into how I could get certified. I actually talked to Julie Rice and Elizabeth Cutler, who are the founders, and said like, would you franchise this? And they were like, no, we're just trying to figure this out here. Still shortly after Equinox, you know, took on equity in the business and then it was like off to the races for SoulCycle. But I very much did model Harness Cycle after SoulCycle because I felt like this place in the whole of Manhattan was giving me this experience, even though I wasn't a resident and was just coming there to work, that made me feel— I had physical results, I had emotional results, I had just this feeling like I had a sense of place in like the whole of one of the most populated cities in the world. Yeah. And I wanted to create that in Cleveland, in my own neighborhood. And so that was kind of the path of the idea that led to wanting to open a cycling studio in Cleveland, specifically in Ohio City, cuz that was my neighborhood.

Speaker C [00:13:59]:
How quickly did you come to understand how this idea, the creation of that kind of place for people resonated here?

Anne Hartnett [00:14:09]:
Instantly. We, so I, I found the location for our first studio while I was on maternity leave from work. I was, yeah, I was on maternity leave in the spring with my oldest son who happened to be a very good baby. And so we were out and about all the time. And I was introduced to my friend, my now friend, Graham Veazey, who had just bought with his partner Marika a foreclosure right on the block in Ohio City. And I had already written the business plan for Harness Cycles, sat on it for well over a year, just wasn't sure. You know, when the timing would be right. So signed the lease, had naively thought we could open it before I went back to work, but there were some structural things that needed to happen in the building.

Anne Hartnett [00:14:58]:
So by the time I went back to work in July, it still wasn't ready. No problem. But I was getting phone calls from the bike distributor who I had purchased the bikes from, and he was like, Anne, if you don't give me a delivery date, I'm gonna have to start charging you rent. For storing the bikes here in Columbus. And I'm like, okay, when can you give me till? He's like, I can give you till October. So our studio wasn't ready yet in, on West 29th in Detroit, but there was a couple storefronts open on West 25th. And so I negotiated a month-to-month lease with a landlord on West 25th, right across from Mitchell's Ice Cream. Mitchell's open yet, but now Mitchell's Ice Cream.

Anne Hartnett [00:15:42]:
And I was like, I'll just probably need it for 30 days. Of course that turned into 6 months. But, um, so I'm like, okay, you're gonna deliver the bikes to this storefront. Here's the address. My husband built like a really simple, uh, platform for me to teach the classes on. So there was like an elevated stage. We had a pretty semi-temporary sound system. There was one bathroom.

Anne Hartnett [00:16:06]:
It did not have a door. So you'd have to be like, somebody's in here. Um, but there was a bathroom in the storefront and we just kind of hung two curtains to try and make it feel like a separate room. And yeah, we had the lease, put up some signs. And I remember I was, I was using just kind of a temporary booking site. We didn't have a website yet or our CRM system launched. And so I created the class. I sent out a newsletter.

Anne Hartnett [00:16:37]:
I had been collecting names and we had been doing like a group, so I had a distribution list at that point. And within 2 minutes, the first 3 classes that weekend, our opening weekend sold out. And I was like, oh man, okay, may— we either need more bikes or more classes. But I also remember just thinking, okay, now I've gotta figure out how to do the logistics of this coming weekend. So I don't think I quick— I knew immediately that it would it would follow that trajectory. I, I thought maybe that was just 'cause it was opening weekend and friends and family wanted to support me. Um, but it really didn't stop there. We, we really kind of struck on this moment in time, um, where a lot of activities like this weren't happening in Cleveland.

Anne Hartnett [00:17:22]:
I'm so proud of how many boutique studios and fitness and like the culture of Cleveland has changed so much in the last 13 years, but at that time, I was in my late 20s and it was like browns and bars was like kind of the social scene. And so to create like social energy on a weekend around a stationary bike was like really different in Cleveland at that point in time. And so it was really exciting and contagious. And I, I'll often say now, and in those early days, it was some of the best and brightest. In Cleveland, you could walk in the room and be like, I bet you 100% of these people are registered to vote. Like they were, they're just like civically engaged people excited to be back in Cleveland. And again, this was post-rebound, people excited to make a mark in Cleveland. And, and so yeah, I, I think from very early on it wasn't about fitness.

Anne Hartnett [00:18:21]:
It was about this identity. Of like young, active people gathering together and moving together and then like going back out in the city at the end of that 45 minutes and doing something great. Um, that, that really anchored the culture of what our brand became, which was much more than the four walls we were moving in. Um, and has generally become one of our core values, which is a neighborhood anchor. and just kind of this place you can always go back to for, as a source for energy or inspiration.

Speaker C [00:19:01]:
Yeah, no, I love that.

Jeffrey Stern [00:19:02]:
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Speaker C [00:20:05]:
Obviously the, the business evolved quite a lot from, you know, a true startup storefront. And scaled to other locations. And when you reflect on, on the evolution of the whole thing, I'm curious, what do you feel sticks with you as the real kind of lessons of scaling the business, of, of operating this very people-centric business and also the, the brick and mortar side of, of the business?

Anne Hartnett [00:20:35]:
Yeah, I, I, I definitely modeled the like the ride after SoulCycle, which was music-driven, beat-driven. But I always knew the trajectory would be different. And even when I wasn't quite sure what growth would look like, I knew it wouldn't be, you know, the mid-market, mid-city model of SoulCycle. And I think that's because of why I started was more about being part of the fabric of neighborhood revitalization than it was being in the fitness industry. So while that was what we were doing, it wasn't why we were doing it or why I started Harness. Why I genuinely started Harness was to be part of Cleveland's revitalization. And like the means to that end was a stationary bike, but, but it wasn't necessarily to create the best fitness studio in the industry or in the city. It was to create a better neighborhood and a better community within that neighborhood.

Anne Hartnett [00:21:38]:
And so what sticks out to me is, is just the impact Harness did have on our neighboring businesses. We, we became, you know, a lot of times it felt like our high school graduating class. Like there's like 6 of us that opened around the same time and grew around the same time and learned around the same time. Um, you know, Bee Jar, Rising Star, Cleveland Tea Revival, Jukebox, like these, these were our peer businesses and we really created, um, this playoff of each other. So then we, we opened a second location in downtown Cleveland and I didn't have that cohort of businesses. I had one, which was Poor Cleveland, still very good friends with Charlie who owned that coffee shop. But what stuck out to me is the conditions that were in our first location weren't there in the neighborhood on East 6th in downtown Cleveland. And I think it was really impactful to have that experience to learn what was luck and what was something that needs to be fostered in future locations or future growth for this to feel like harness cycle.

Anne Hartnett [00:22:52]:
Because like I said, it wasn't just about the class or the ride, it was about the experience of being part of this neighborhood anchor amongst other businesses, residents, other community assets. And so what sticks out to me is that, that became like glaringly obvious that we didn't have control over those conditions in our second location. And I do think it impacted a bit the stickiness. We, we didn't quite have the rapid response and growth. It, it ended up being successful and profitable, but it wasn't our first location felt. And that was always something I would revisit of like, what are we missing here? Because obviously we're nailing the class experience. Like we have a great training program. These instructors aren't the same.

Anne Hartnett [00:23:44]:
So what's different? And that X factor actually I think was the fabric of the neighborhood and those kind of exterior conditions. Around the studio, and that ultimately informed where we are now and how we've developed where Harness is now. Not spoiler alert, but we've developed a whole building around in a cycle. And so I think, yeah, I think that's what sticks out to me is that, that factor, that X factor for us was more about neighborhood than it was the experience you are getting within our four walls.

Speaker C [00:24:21]:
The, the anchor of neighborhood revitalization as kind of the through line of the work you're doing actually makes a ton of sense to me as like how you would end up then doing all the other fun and exciting companies and projects that you've, you've taken on since. I mean, with, with that in mind, I think people would look to Ohio City as an example of what neighborhood revitalization done well looks like and as kind of an example, something to aspire to. What do you think it actually took for that to, to happen and why hasn't it happened in a lot more neighborhoods?

Anne Hartnett [00:24:56]:
Hmm. Well, I can speak more specifically to our little district, which is identified now as Hingetown.

Speaker C [00:25:04]:
Yeah.

Anne Hartnett [00:25:04]:
Which is like kind of the intersection of downtown Ohio City, Detroit Shoreway, and even the Flats. Like we're kind of this pocket of Ohio City.

Jeffrey Stern [00:25:13]:
There's this density around it.

Anne Hartnett [00:25:16]:
Yeah, and I think I honestly would like credit a few crazy individuals, myself being one of them. Um, but Graham, Veezy, Marika, um, other entrepreneurs that opened these businesses. It was kind of this perfect storm of time where we all had this aspiration and, and came in the same little pocket. I believe though. That there are elements to what we had that ended up feeling like luck in 2013 and, you know, beyond, beyond opening that can be recreated. And I, I have this core belief that, um, if we can start to find a public-private relationship in this, in this way and not just rely on really, um, risk takers that are willing to put it all on the line and bootstrap. Because genuinely this neighborhood was bootstrapped. Um, now it's not like the building behind me.

Speaker C [00:26:19]:
So that's what it took.

Anne Hartnett [00:26:20]:
Yeah. Yeah. The building behind me came after the bootstrapping. And so, you know, I think that why other neighborhoods aren't having this concentration of development is because I, I think from a public standpoint, economic development standpoint, when we're looking at what incentives are in place, we need to be as a city creating these conditions and not relying on individuals to bear the brunt of so much risk and innovation. And I, I very much think it's possible, but I think that, that in order to see it be more catalytic and happen faster in more areas, we need to create systems and really conditions for this success to be more of a formula and not luck. So, yeah, I mean, that's probably a whole nother podcast of all my, yep, my soapbox philosophies on that. But I, you know, I'm often told like, this is so unique. You're, you were an entrepreneur, you know, operator that now is a developer.

Anne Hartnett [00:27:26]:
And it's like, it's we could say I'm one or the other, or we could start identifying that this should be normalized, that operators are neighborhood developers because they are. Brick and mortar businesses create safety, they create jobs, they create culture, they create vibrancy, they create often a demand for housing around them. They just don't have equity in that neighborhood that they're helping stabilize. And so I think it's uncommon to sit in the seat I'm in, which is operator and now developer and landlord, because it took a ton of risk for me to do that. And I think, you know, there's still a question if that risk will pay off, but I think if, if I can at least be the experiment to how we can create progress and allow operators, brick-and-mortar operators to, to have some skin in that game and, and ultimately the upside, I think we start to really create a new unlock in our neighborhoods in Cleveland.

Speaker C [00:28:36]:
Yeah, I, I definitely wanna revisit the equity in the upside piece, but I think it's, it's kind of an amazing undertaking from the entrepreneurial perspective. There's just like, perennial out there, you know, wisdom that brick and mortar is gonna be way more difficult than a software business, for example. And increasingly where so much of our economy has gone online, physical space and in-person experience businesses have higher fixed costs, operational complexity, different margin profiles, all these kind of inner workings challenges that make them difficult. And but they do obviously create this underlying value for society, for the local community, and economically, but there does seem to be like an economic mismatch or challenge. And so it's awesome that like as part of your journey you're trying to figure that out.

Anne Hartnett [00:29:30]:
Yeah, I think, I think I often look to how we look at housing and, you know, of course like owning a brick and mortar isn't a basic need like housing is, but we often look at housing as a path to creating generational wealth. And, um, you know, if you're a brick and mortar operator, your exit strategy's tough. It's, you know, your, your margins to what you just mentioned are never gonna be hockey stick projections like a software company, or you're not gonna have a unicorn coffee shop. But if you look at my story, you know, if I had bought my building in 2013 or even bought my storefront, that is a hockey stick return on, on the real estate. You know, I essentially priced myself out. And so in a market like Cleveland where we have, we have the infrastructure already, we have vacant storefronts by the droves. In just about every neighborhood, and a lot of them are beautiful and historic, and they're far too small for most of our 5 developers in Cleveland to consider. And so when you ask someone to take the risk to open their storefront or their concept, you know, this is really cheap rent, or we'll give you a year free rent, you're just really creating a peer to open their business, but but not build wealth or really generate equity.

Anne Hartnett [00:31:10]:
They're really just gonna have hopefully net profit, but they're not building equity. It's not really a sellable business. They, they really, so I think, you know, my kind of whole thesis on it is like, well, if they have the upside on that real estate, that does change the math, the economics of brick and mortar business and what their options are. For, you know, leveraging to scale or, you know, they could sell the business, the real estate, they can sell all of it. You know, it, it just opens up pathways from an economic standpoint that just are not there if you are just a tenant with startup costs and you're just relying off operating profit.

Speaker C [00:31:58]:
Right.

Anne Hartnett [00:31:59]:
And so I, I think too, I'm always arguing that retail is not dead. It's just different. It's just changed. We quite frankly need in-person third spaces more than ever. With remote work and still recovering from what is known as like loneliness epidemic in the US, I, I would say that these activations of storefronts, especially in a region like Cleveland, that 6 months out of the year we're not gonna gather in our local park, um, or at the beach is, is critical. And so I think it's what is happening in these storefronts that is different, but I don't think retail is dead. I don't think brick and mortar is dead. I think humans need to interact.

Anne Hartnett [00:32:45]:
And so we just need to like identify what these experiences are in these spaces.

Speaker C [00:32:50]:
Yeah, I really feel you can make the case small businesses with physical presence are like an actual form of civic infrastructure.

Anne Hartnett [00:32:58]:
And absolutely.

Speaker C [00:32:59]:
I mean, when, when, when you, when you lose a physical space like that, I mean, you, you mentioned at the very beginning the, the idea of like the fabric of a community. I mean, you, when you gain a, a, a small business, when you lose one, like the fabric changes, people completely feel that.

Anne Hartnett [00:33:15]:
Completely. And I mean, I think it's not even just like people move to this neighborhood to to be near Harness and to be near these businesses. Like, it quite literally attracted a place to live and created demand for high-rises in this neighborhood just by the small businesses that were in it. Like, to me, yeah, you can't say there's no economics behind it when, like, look at this building behind me, you know?

Jeffrey Stern [00:33:43]:
Like, that—

Speaker C [00:33:44]:
I mean, that, that's the, the power of this insight, I think, that you've had, that small businesses are creating tremendous neighborhood value that they are not getting to share in the upside of.

Anne Hartnett [00:33:57]:
And I think you said, you know, looking at a civic asset is why I continue to invite the conversation of like public-private partnership because if, yeah, if the public tools viewed these small businesses not as just small business, but as neighborhood assets. I think it would also like loosen the grip a little bit on funding, which is so tight and, and just so critical. We don't bat an eye at like maintaining a neighborhood park. Like, of course we're gonna do that. Of course we're gonna upkeep and make sure trash is getting picked up and what's the capital expense every year on that. But you go to lend a small business $50,000 and it's like, well, can we put a lien on your house? And you're like, so I think it's changing the mindset a bit. And, and when I say often the language I use is I'm talking specifically about brick and mortar. I'm not just talking about small business because I think that can take on a lot of shapes and forms.

Anne Hartnett [00:35:02]:
And I'm not implying that every small business has neighborhood impact. But brick and mortar specifically, I think I'm just continuing to try and have the conversation of like, how do we support these as community assets and not just view them as small business?

Jeffrey Stern [00:35:19]:
Yeah.

Speaker C [00:35:20]:
Well, I, I think it will make sense then to just kind of continue the, the through line and maybe if you could just speak a bit to Vitrolight and HCO Partners and, you know, the work you're doing today as it evolved out of Harness Cycle.

Anne Hartnett [00:35:33]:
My, my product placement. Of patron saints. Um, so yeah, so the Vitrolite, we closed both Harness Cycle Hingetown and downtown preemptively. We actually closed before it was mandated by the state in March 2020. And a million pivots, went digital, leased out one storefront, renegotiated another, but ultimately wound both locations down. Not quite sure what was gonna happen. But a non-negotiable for me became, you know, very much probably informing what I'm talking about so much right now was those first 7 years, I had really helped create 2 businesses. One was Harness Cycle and the other was Hinge On.

Anne Hartnett [00:36:23]:
And I only had equity in one, and that one evaporated because of COVID-19, the market value of our neighborhood actually went up even more during COVID and the value of the real estate. When I first signed my lease, it was $7 a square foot. By the time COVID hit, market rate was $30 a square foot, 7 years later. So when I talk about that, like upside, that's the number I'm referring to.

Speaker C [00:36:51]:
Yeah.

Anne Hartnett [00:36:51]:
So a non-negotiable for me after I had closed both, both locations was if I'm going to reopen Harness Cycle, because folding was on the table, it has to be in a space that I own. I never imagined it would be 18,000 square foot historic property. I was thinking like, I don't know, 2,500 square feet on Lorraine Ave in Ohio City with maybe like an apartment above that I could rent. But as the universe does, Or, you know, life, life does. As soon as I made that kind of concrete decision, line in the sand, the building right next door to our original location went up for sale, which is the Bitcholite. And so I toured it just outta curiosity. I really did not think that this would be something I would ever be able to figure out how to finance or pull off. But I walked through the whole building and I came home.

Anne Hartnett [00:37:47]:
I had just had my youngest my daughter. Um, it was the first time I left her. I think, I think she was like 3 weeks old and I was like, I gotta go look at this building. And my, I'm like, here, hold the baby. And I come back to nurse the baby and my husband's like, what'd you think? I was like, I don't know how, but I'm, I have to buy that building. It's, it's everything that, you know, I could imagine I want to be part of. And like, if I'm gonna do this, let's like Let's do this. So that is a very, like, again, simple way of saying what's been a really complex now for almost 5 years of this project.

Anne Hartnett [00:38:26]:
But what I saw the first time and like visioned the first time I walked through the building is, is what we now have today, which is comprised of several small businesses. Patron Saint, which is an Italian all-day cafe. It's incredible. It's so, so well done and just really meets, I think, an interesting segment, which like a lot of people are working from there, taking meetings, but it's also a great happy hour spot. We have Soul Yoga, which is a yoga studio on the second floor, these beautiful historic arched windows that looks onto Lake Erie. It's owned by Yolanda Rosenthal Green. She's one of the only Black operators of a Fitness studio, definitely yoga studio in the city, and she has just created this incredibly diverse, incredible welcoming community with her yoga studio. Um, I'm sitting in the Matriarchy, which is our private office space.

Anne Hartnett [00:39:25]:
We have 10 private offices and a club room. Um, they're all individual businesses. Men are allowed here. We're just trying to create a, a space space that's a reflection of the world we want to live in. But the clubroom is a host to a lot of different community events. Really proud to have just recently had Dr. Amy Acton here. She hosted a small business forum to talk about the platform she's running on for governor of Ohio, but really runs the gamut of different types of community events that are hosted in the Matriarchy.

Anne Hartnett [00:39:57]:
Harness Cycle reopened. We're in the first floor on the backside of the building. And last but not least, we're under construction for our final concept, which is called Luma. It mirrors what is trending in the beauty industry. We've seen what the kind of the lead in that is salon lofts where hairstylists actually a lot during COVID realized they can with technology manage their own book of business scheduling and really just take payment over Venmo or any type of iPhone, um, and the value of a salon operator started to lose its value. And so my business partner, Andrea, and I, our partnership is called HCO Partners, and we're kind of the underbelly engine of all of these things. Um, we believe that wellness is gonna head this direction as well. Um, so Luma is 15 practitioner suites where individual practitioners really that are experienced and have an existing book of business will rent the suite.

Anne Hartnett [00:40:54]:
Suite. The look and feel of the space feels like you're walking into a spa, but, but they are really independent practitioners managing their own small business. That is slated to open early summer 2026. It'll also have some really great amenities like sauna, cold plunge showers, a micro gym. So just a really beautiful kind of capstone to this whole project. By the time this project is done with all of these Offices and tenants, we will have 35 small businesses in this building.

Speaker C [00:41:29]:
Wow.

Anne Hartnett [00:41:29]:
Which is pretty remarkable for 18,000 square feet. And we closed on the property in 2022.

Speaker C [00:41:37]:
I think it's amazing.

Anne Hartnett [00:41:38]:
Thank you. And I think what, aside what we've been able to prove here and that you can go from operator to developer is retail's not dead. This entire project is retail. It's 100% retail, which made it very difficult to finance because the belief is retail is dead. And most projects you see, that's the last to lease up. For us, we, we said we don't agree. And creating this community and this integration between all of these actually helps them all thrive. And the kind of hypothesis of conditions that need to be in place for retailers to succeed, we were able to kind of force in the VitroLite and it's working.

Anne Hartnett [00:42:17]:
Every, every business is is really thriving. I think more so than ever, January and February in Cleveland was the leading indicator for us. You'd come here on a Saturday or Sunday and every pocket of the building was activated with events or programming or classes or the restaurant. And there's not a lot happening in Cleveland in January and February that you can say that about. Um, you know, even Super Bowl Sunday. The, the place had tons of different activities going on in the vitriolite and none of them had to do with the NFL. So, so yeah, I, I, you know, I can't imagine all the ways I've made, I've stumbled with this project. I've learned so, so much, not just about all the different tools and ways I didn't I didn't understand the industry, but also just about myself and resilience and just kind of staying focused on the end goal.

Anne Hartnett [00:43:25]:
So we're almost there. Luma will open in just a few months and hopefully will unlock our ability to recapitalize the whole project and, and just put us on really sure ground.

Speaker C [00:43:38]:
Yeah, it is really cool. I mean, there's this old investing adage that you ultimately want to be contrarian and right where you kind of identify the consensus, which would be that retail is dead and you don't want to do it, but you've validated this alternative and independently, you know, kind of worked out a model that works. And I think, I mean, if the last, I mean, really since the pandemic and in consideration of everything that's going on with artificial intelligence. It's like the only thing that won't be automatable is our community.

Anne Hartnett [00:44:18]:
Mm-hmm.

Speaker C [00:44:18]:
And like physical spaces. And so, I hope you are contrarian and correct, 'cause I, I think you will be, but—

Anne Hartnett [00:44:24]:
Thank you. Yeah, I hope so too. And I think, I think you're right. You know, I, I think it's finding the things that are happening in the, in these spaces that can't be replaced. By technology. Having said that, I think there are pieces of it that are almost easier because of the technology and we can focus on the community pieces. So it's opened up bandwidth for us to, you know, how we plan events, how we create programming, how we communicate, how we get people here. That is easier because of technology and all of the facets of communication and media and branding to give exposure.

Anne Hartnett [00:45:01]:
But then it's like, when people are in here, you can't replace that feeling. So yeah, I'm hopeful that the Vitrolight becomes a model and not just a successful project. I hope that beyond this, for me, a lot of people say, well, what's, what's your next project? And I think, I think it's advocacy. I think it's helping create the formula. So this is repeatable faster and in more places. I don't need a portfolio of buildings. I need, I need to be a part of a city that identifies as a place that wants to support brick and mortar business. And so I, I hope I can be an advocate for that and really start to drive attention around how we can do this as a city.

Anne Hartnett [00:45:45]:
You know, we always talk about like Cleveland can be the next X city, and I think we all have our own version of what that X could be. And for me it's like, could we be the city that brought back brick and mortar? In all of its different historic neighborhoods and celebrated the culture of those around it. That's kind of my hope.

Speaker C [00:46:05]:
Yeah. What do you think it takes to get there?

Anne Hartnett [00:46:09]:
I think it's simpler than, than it may seem. I, I think it is pathways to funding projects as if they are community assets and not just small business loans. So I, I do think it requires a lot of people rowing the same direction. Um, and it is gonna require a public-private partnership. There are a lot of people that actually have aspirations to open brick-and-mortar businesses. I feel like I'm like the whisper, you know, I'll be like out at night and be like, oh, I just like really love to leave my law firm in order and open a flower shop. Or like, oh, I have this dream of opening like A chick will sport.

Jeffrey Stern [00:46:50]:
It is the dream.

Anne Hartnett [00:46:52]:
You know, and it's like, um, imagine if we created pathways where that isn't like hard to imagine how to make money doing that and get from idea to open. And I think, you know, in your world of technology and my former world of software, like we do this all the time in other industries. Like we create accelerators, we create pathways to funding. We create funds specific for that industry, and it really doesn't exist for brick and mortar. You know, it's, it's really kind of like everyone's starting from scratch with their idea. And I think that's one of the first steps is like creating this ecosystem where we're creating knowledge sharing, we're creating the engines under it, we're creating the formulas, the pathways to funding. And when you start to systemize that, it doesn't feel like this massive complex problem. It starts to feel like a system that can create a solution.

Speaker C [00:47:52]:
Yeah. No, it's, it's, it's a really interesting, I mean, it could be the, the solution.

Anne Hartnett [00:48:00]:
Do you want to take the most, you want to create an Ohio fund for brick and mortar?

Speaker C [00:48:05]:
I mean, kind of, yeah. If you take the, you know, the real pessimistic most pessimistic, like punitive case scenario for what AI does to society. Like, I mean, this is a genuine path forward also.

Anne Hartnett [00:48:19]:
And I think, you know, it's interesting because a lot of our, all of our public funding for this project had to go towards capital improvements. Like, it couldn't be used for marketing or legal or, yeah, you know, and there was some gray area there, but, but, but for the most part, it had to be used towards capital improvements. And I would argue even if my iteration of the Vitrolite failed or ended, those public dollars still created value in this neighborhood by stabilizing, for sure, physical space, modernizing it for the next end user. And so I think in the terms of public dollars, it's not a ton of risk because you're still creating value to an asset within your city limits that can be used by a different end user. I think, but that's just like a mindset shift. I think we need to really get our heads around is that one end user not lasting, there's still that residual impact of how those dollars were spent to stabilize a physical building. And in Cleveland, there's a lot of historic buildings that we don't wanna lose.

Speaker C [00:49:34]:
I'm sure there are ways to quantify it, you know, more economically, but I mean, if you just reflect on where Hingetown was when you started and where it is today, I mean, it's pretty extraordinary. All the businesses that are there, all the people that go there, it's, it's like an actual destination point within Cleveland.

Anne Hartnett [00:49:54]:
Yeah. You know, it's always like the place you get the backhanded comment. Compliment of like, oh, I feel like I'm not in Cleveland. Or like, you know, you're in—

Jeffrey Stern [00:50:03]:
but it is Cleveland.

Anne Hartnett [00:50:04]:
It is Cleveland. But that's, that's always the backhanded compliment we receive. Like, this is amazing. I don't even feel like I'm in Cleveland. It's like, well, someday someone will be in a different city and be like, this is amazing. I feel like I'm in Cleveland. 'Cause I did a really cool brick and mortar concept.

Speaker C [00:50:20]:
So how, how, um, what, what do you feel like the future of brick and mortar entrepreneurship actually looks like? Going forward?

Anne Hartnett [00:50:27]:
I think it is experience-based. So even retail, I love seeing this trend of, you know, I, like, I tend to have my eye more on like wellness industry, but like shoe stores aren't like running, running shoe stores aren't like running shoe stores anymore. They're, they're running clubs that sell shoes. And I think just about any previously known retail concept will have to be flipped on its head in that way. Like, sure, I, I don't actually drink alcohol, but like instead of like a wine of the month club that, yeah, you can order wine from Sonoma online, but if a wine shop is creating experience, you know, a couple nights a week with tastings and you're meeting people and you're learning about the winemaker, um, that's more rooted in the experience than the actual product and wine that you're buying. So that, that I think is the future of like consumer good retail. And then I think there is a huge runway right now for, for example, Luma, which is the concept we're opening in the basement and, and we do hope to scale in, in properties we don't own. Like you can't have technology give you acupuncture.

Anne Hartnett [00:51:52]:
Like that's just not something you can replace.

Speaker C [00:51:55]:
Right.

Anne Hartnett [00:51:55]:
And I think we're becoming more and more knowledgeable about getting to the root cause of health issues through functional medicine and outside, like extracting some things out of the healthcare systems. So I think there's a lot of that in the wellness space that, that can't be replaced. And then. I, I do think food and bev is gonna shift. I don't think we're gonna have as many saturation of restaurants, but I think Patron Saint is, is a really cool model for creating this almost feels like really good food, coworking, meeting, community. It's not just a restaurant you sit down and you're served at it. It, it meets like a lot of different needs. Beyond just the food.

Speaker C [00:52:43]:
And it's like the only place you can get aperitivo.

Anne Hartnett [00:52:46]:
Yeah. And the only place that's open on a Monday and Tuesday in the neighborhood, because they, they, they really focus on that like midday, that midday crowd. So in terms of like experience, consumer experience, I think that's the future of brick and mortar is, is really humanizing and making sure that you're creating community in whatever your business is. And my hope is that the future of the economics of it includes equity in real estate, particularly in emerging pockets of the country. I think there's a whole layer of technology that needs to be part of this. It's very hard to list a single storefront. It's just too small for, for the brokerage industry to spend their time on. And so I think we can use technology to really start to pull forward this like dark inventory of storefronts that are out there.

Anne Hartnett [00:53:45]:
You know, you could drive all the way down Lorraine Ave in Ohio City or Buckeye on the east side or Shaker Boulevard, and they're all vacant storefronts, but they are not listed anywhere to rent. So I do think, I do think technology needs to to come into play with brick and mortar and at least just exposing inventory. And I think AI can actually play an awesome role in matchmaking of ideas with spaces. So, you know, technology will play a hand in it, but at the end of the day, like the end experience hopefully creates wealth for the operator. It creates culture and community for the neighbors that live around.

Speaker C [00:54:26]:
How do you feel your own definition of success has changed over time and, and what does it kind of mean today for you?

Anne Hartnett [00:54:34]:
That's a really good question. I think I really have always defined success, maybe even subconsciously, is like I can see before things are real, you know, I can vision, like I said, like this, this building and everything that's in place is exactly what I saw from the first day. So for the most part, success to me looks like when I can bring idea to actualization. Um, and I'm like almost there because we still have to finish this last piece. I think, you know, for better or worse, I need to shift a little bit. Success financially has never been like super like a north star for me, but it, at the end of the day, that is the fuel and oxygen to keep going. And so I think in the last several years, especially with this project that has started to become more of a factor of what, you know, what financial growth looks like and how, how does that fuel the next stage of growth. So that's shifting for me.

Anne Hartnett [00:55:35]:
I think the last thing I'll end with is a, a totally new kind of theory I've had is like that success is not the opposite of failure. It's, it's the opposite of burnout because like there have been tons of times that I have failed or made a bad decision or fallen on my face, but it always ends up being like actually still a ladder to move forward. Like even when I have failed or made the wrong decision or one step back, two steps forward, failure isn't the opposite of success. The only thing that actually will pull the plug on me is me. And the only way that's gonna happen is if I. I can't do this anymore. And I, so I think that has been like a really overarching, more recent measure of success is like the quality of my life and how I'm spending my time. I have 4 kids, I'm married, I love the neighborhood I've helped, um, make better.

Anne Hartnett [00:56:39]:
I'm, I have 5 siblings and 20 nieces and nephews, like I wanna travel. Um, so I think more recently, and maybe it's just 'cause I'm getting older as well in my forties, but the measure of success is the quality of life that I'm still holding. Um, in the midst of push and stress and creation, um, and the ability to like hold both at the same time.

Speaker C [00:57:07]:
Yeah, that, that's awesome.

Jeffrey Stern [00:57:09]:
I, I love that definition of it.

Speaker C [00:57:11]:
It's, that's beautiful. With that, is there anything particularly important that comes to mind that you wish we had talked about that, that we hadn't?

Anne Hartnett [00:57:20]:
I don't think so. I think this was great and I'm really, I'm really grateful for the opportunity to share my passion around what I think the future of brick and mortar can be specifically in Cleveland. 'Cause I think it, it's something that's not really focused on right now. I'll just give like anecdotally JobsOhio.

Speaker C [00:57:40]:
Yeah.

Anne Hartnett [00:57:41]:
Privatized economic development for Ohio and brick and mortar is specifically excluded from any grants or loan programs that JobsOhio has. So like the overarching, like in Ohio economic development program excludes brick and mortar. And I, and I think it's not to like step on the neck of brick and mortar. I think it's just, it's this misconception of how this can be a driver for economic growth in our region. And I think personally, like, I'm often viewed as either small business owner or, you know, just trying to get the vitriolite off the ground. But really, like, the undercurrent of all of it is this belief that I have that we can do this in a simpler, systematic way that makes our city better. So thanks for your thoughtful questions and the opportunity to just kind of get philosophical on brick and mortar.

Speaker C [00:58:46]:
Yeah, I think you paint a compelling vision for what that future of brick and mortar might look like.

Anne Hartnett [00:58:52]:
All right.

Speaker C [00:58:53]:
It's fun to learn. Well, we'll close then with our traditional closing question, which is for hidden gem in Cleveland?

Anne Hartnett [00:59:02]:
Well, I already talked a ton about Patron Saint, so I don't think, I don't think I can say that's, that's—

Speaker C [00:59:11]:
there could, there could be multiple. There could be multiple.

Anne Hartnett [00:59:13]:
All right. Well, Patron Saint is just top notch. You gotta go there and it's the gateway to the vitriolite. Ha, I'm sorry. I have to say it's Harness Cycle because it is still hidden gem. Everyone is intimidated by it. The lights are dark. We just have candlelight.

Anne Hartnett [00:59:33]:
It's really good music. It's loud. And at the end of the day, it's a stationary bike. But the feeling and the endorphins you get post those 45 minutes are like unmatched. We call it a spin high. My best ideas come out of spin classes. I often have to like make sure I'm talking to only other people that were in the class with me afterwards. Cuz otherwise I'm like talking a million miles a minute and someone's like, what is going on? But well beyond the physical, it's an awesome experience.

Anne Hartnett [01:00:04]:
And I'm obviously biased and self-promoting right now on both fronts, but I would have to say Patron Sane and Harness Cycle are my, my personal go-tos in Cleveland.

Speaker C [01:00:15]:
Well, tho— those are, those are perfect hidden gems.

Anne Hartnett [01:00:18]:
Yeah.

Speaker C [01:00:19]:
If folks had anything they wanted to follow up with, to visit, to just learn more, where would you direct them? Both, you know, physically.

Anne Hartnett [01:00:29]:
2915 Detroit Ave. I'm here just about every day and I love, I absolutely love giving tours. The response in people's eyes when they kind of go through the whole project, they're like, this is awesome. I'm like, thanks. So it's fuel to me when I'm, I'm still kind of shuffling through the mud. I'm off most social media other than LinkedIn. I, I really actually love connecting on LinkedIn, so look, look me up there. Um, or our website, thevitrolite.com.

Anne Hartnett [01:01:01]:
You can kind of look through the whole project and contact me through there.

Speaker C [01:01:06]:
Perfect. I just want to, to thank you, Anne, for sharing a little bit about your journey and the, the work that you're doing.

Anne Hartnett [01:01:12]:
Thank you. And thanks for continuing to, to just shine light on entrepreneurs in Cleveland. It's, it's really nice to just take a, take a minute to reflect on the journey and, you know, it's a lot of work on your part. So thanks for doing it and keep it up.

Speaker C [01:01:31]:
Thank you. I appreciate that.

Jeffrey Stern [01:01:34]:
That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show. So if you have any feedback, please send over an email to jeffrey@layoftheland.fm or find us on Twitter @podlayoftheland or @sternfa.

Speaker C [01:01:49]:
J-E-F-F-E.

Jeffrey Stern [01:01:51]:
If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on iTunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland Founders builders we love having on the show. We'll be back here next week at the same time to map more of the land. The Lay of the Land podcast was developed in collaboration with The Up Company LLC. At the time of this recording, unless otherwise indicated, we do not own equity or other financial interests in the company which appear on the show. All opinions expressed by podcast participants are solely their own and do not reflect the opinions of any entity which employs us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Jeffrey Stern [01:02:38]:
Thank you for listening, and we'll talk to you next week.