Galvanize, the Denver-based coworking firm and coding school operator, laid off 7 percent of its workforce Wednesday and is looking at shutting one of its local locations.
CEO Harsh Patel told BusinessDen that 27 employees were cut Wednesday, 10 of them in Colorado. Galvanize employs around 400 workers on nine campuses.
Patel said the company would like to close its original location, at 1062 Delaware St. in the Golden Triangle, although that has not been finalized. He said Galvanize, which has raised around $170 million in VC, has a long-term lease and is negotiating with its landlord.
Patel said Galvanize no longer teaches coding bootcamp classes there. The location houses coworking tenants and Galvanize’s administrative offices.
“The floorplan and everything is built for coworking and education, and without the education component here, on a bootcamp perspective, the economics don’t make sense with our current building and layout to only operate coworking,” Patel said.
Patel said it’s still unclear when the location might close.
“We may continue to operate coworking for a certain amount of time, and that timeline is determined by when the landlord is ready to recapture the location,” he said.
The building is owned by GAB Delaware LLC, an entity affiliated with Doug Brown, the founder of Los Angeles-based Regent Properties. Brown did not respond to requests for comment.
While the coworking industry has gotten more crowded, both in Denver and across the country, Patel said the company believes its additional focus on education makes it attractive to potential tenants.
“When we talk to people interested in coworking, that’s one of the reasons why they are so interested in it, because they get to surround themselves with talent that they can then go and hire,” he said.
Galvanize hopes current coworking tenants in the Golden Triangle will move to the company’s other Denver location on Platte Street.
Patel, who became CEO in April, said the layoffs are an effort “to move Galvanize from a consistently venture-backed business to a more mature operating business.”
He said that upon becoming CEO, he toured Galvanize’s various campuses and spoke with employees, then dove into the business’ finances.
“In order to set this business up for success in the future, we’re going to have to look at all of our operating costs everywhere, and unfortunately, that’s when we realized that we will need to reduce our headcount, in addition to reducing some of our operating costs elsewhere,” he said.
Galvanize was founded in 2012, offering coworking and coding classes in the Golden Triangle. It announced plans for its second Denver location on Platte Street in late 2013, the same year it opened in San Francisco. A Boulder location opened the following year, while a Fort Collins outpost opened in 2015 but closed the following year. Today, the company also has locations in Los Angeles, New York City, Phoenix, Seattle and Austin, Texas, according to its website.
Jim Deters, cofounder, stepped down as CEO in 2017, and the company laid off 11 percent of its workforce shortly thereafter.
Galvanize has raised a total of $168 million, according to Crunchbase. It used its most recent round last year to acquire Patel’s coding education startup, Hack Reactor. Galvanize began using Hack Reactor’s curriculum for its software engineering courses and also brought on approximately 150 Hack Reactor employees.
“When you combine two companies together, your corporate overhead increases in general,” Patel said. “We didn’t make any changes on that front at the acquisition time, and now, when I dig in and look at the business, I think it’s the right thing to do moving forward … so that the overhead of the combined business isn’t unsustainable.”
Patel sees the future of the company’s growth in online enrollment and in selling its education to companies wanting Galvanize to train their staffs. Patel said that on-campus enrollment in software engineering or data science bootcamps has declined.
“We’re seeing it decrease while online enrollment increases,” he said. “So I think if you talk to the students in both programs, the students in the remote program only say, ‘Wow, this actually feels just like the on-campus program, except I don’t have to drive in every day and find parking.”