In a dreary economy, with record numbers of Portlanders unemployed and underemployed, the shared work space is hoping to tap into the city’s DIY sensibility to foster innovation, creativity and a new connection to work. But similar projects have tried here before --- and failed. Will ADX’s new approach pencil out?

Located on the edge of Portland’s eastside industrial district, ADX (Art Design Portland) occupies a 10,000-square-foot warehouse once filled by Apex Manufacturing. The warehouse has since been gutted and renovated, with the letters ADX printed across its façade.

Inside, the bright space smells of new paint and freshly cut wood. “It’s our first day” says founder Kelley Roy as we walk to the makeshift interview area — three wooden chairs set in front of the company’s gallery space. A slow-moving Labrador trails us and lies down at Kelley’s feet.

Kelley ticks through her professional history as if one gig could only have led to the next: Program Manager for Metro, green building developer, founder of food source and prep company Get Fresh NYC, author of Cartopia: Portland’s Food Cart Revolution, and now founder of ADX. “Everything I’ve done is about bringing people together over something I cared about,” she says. “Bringing people back together and giving them a place to work, to make their own jobs, do meaningful work. It’s just important to me.”

Her business partner, Eric Black, joins us a minute later. Trained as an architect, Eric spent the past seven years at the architecture firm Yost Grube Hall in downtown Portland. From there he moved on to found the first iteration of ADX, located in a 3,000-square-foot building on southeast 9^th avenue. This first version of ADX was a shared workspace and shop for architects, with 1,000 square feet of gallery space.

The pair met when Kelly needed space to show work for a visiting artist friend, and ended up leasing the ADX gallery. It was then that they began re-envisioning ADX as a true cross-disciplinary work space.  “We started to prototype the idea of what it could really mean within that space,” says Eric. “It was a nice test.”

The pair secured a $145,000 loan from Albina Opportunities Corporation and Mercy Corps Northwest to lease, renovate and equip their new building. The nonprofit lenders stepped in to support ADX because they saw its potential as a jobs catalyst, an objective not lost on Kelley: “We’d really feel that sense of success in what we’re trying to create if those jobs really thrive here in Portland. Take the bad economy and the lack of jobs and turn it into an opportunity.”

Shared builder spaces have popped up around the country throughout the last decade. 3^rd Ward, a shared work space in New York’s Williamsburg’s neighborhood, was founded in 2006 by Jason Goodman and Jeremy Lovitt as a response to the city’s prohibitively expensive artist studio rates. The company has more than doubled membership in the past year, reaching1,250 members and bringing in over 200 instructors to teach everything from studio lighting to welding. It employs 20 full and part-time staff. 3^rd Ward is currently expanding to the second floor of their building, adding 10,000 square feet of classrooms, a wood shop, tech and photo studios and more shared work space. The company has been growing throughout the recession, wrote Jessica Tom, director of marketing, “As people lose their jobs, we pick them up as freelancers who use our space as their company structure."

***

Early interest in ADX, to the pairs’ surprise, came largely from local creative firms, as opposed to the casual hobbyist. The firms signed up for ADX membership include The Official Manufacturing Company, Factory North, Hand Eye Supply, Build Design and Kate Bingaman Burt.

The success of these firms largely hinges on the fact that they actually make what they design. “I think people are so tired of the plastic nature of the way things are made” says Eric, “they want something better, and they see it can be better if people actually put their hand to it than if a machine makes it.”

The Official Manufacturing Company was in the process of tooling up their own shop when they stumbled across ADX and decided to lease the attached office. For Official Manufacturing, the access to space and tools made sense. “If we weren’t subleasing from them we definitely would have a business membership, and use the tools we wouldn’t be able to afford on our own,” says founder Fritz Mesenbrink.

For the weekend hobbyist or entrepreneur needing a little help realizing his or her concept, ADX has assembled a cohort of experts — designers, videographers, architects — dubbed the “Gang of Ten.” This group of experts pays for desks and access, and offers their consulting services at a 10 percent discount to other members.

The model has allowed ADX to diversity revenue streams: one third from memberships, one third from classes and workshops, and one third from the Gang of Ten fees. Once the space has a healthy community of builders, says Kelley, they’ll begin selling pieces from individual members under the ADX label. “Sort of like Ikea,” she laughs.

The numbers haven’t always penciled out for similar operations, however. TechShop, founded out of the Bay Area in 2006, opened several franchises across the country. One of these locations on the outskirts of Portland, in Beaverton, was forced to file for Chapter 7 bankruptcy in 2010 after low membership turnout.

But, Kelley notes, TechShop was in the wrong location (suburban Beaverton) and with memberships starting at $99 a month, was too expensive for the casual hobbyist. Kelley hopes ADX, with its multiple revenue streams, central location and affordable rates (starting at $25 a month) can be profitable within a year.

Rather than franchising, says Kelley, ADX is interested in partnering with existing maker spaces like 3rd Ward. “They did a lot of research to figure out what their community needs were, and they’re serving the needs of their community — that’s what we did here.”

In a dreary economic climate, the community seems to be responding well: ADX’s open houses enjoyed healthy turnouts, and Kelley and Eric report they are on track to meet their yearly subscription goals. “I don’t know if it’s tied to the recession, but I do think that people are getting over modernism, from a design standpoint,” says Eric “People are actually recognizing high craft.”

Kelley relates the rising consciousness around manufacturing to the organic and local food movement: “I think it’s the same thing with objects. It’s not mainstream yet, but there’s a certain sector of people who care, and care about the people who are making and designing things.”

“Think about it,” says Eric “A hundred and fifty years ago, everything in your life was made by somebody that you knew; that wasn’t that long ago.”

Ilie is the editor of Stake.

In an nondescript warehouse 40 miles west from Portland, Greg Lorenz is bustling from room to room brewing arguably the best sake in North America. Educated in plant biology from Arizona State, he had been growing algae for a health-food startup when the company went belly up in 1996. Shortly after he received an invitation to interview at a new sake company in the area.  “I thought it would be a great opportunity to culture” says Greg, admitting he had no prior experience with beverage fermentation. Following the interview, Greg was offered the position as head brewer for Sake One.

The company was founded in 1992 as the Japan American Beverage Company (JABC), when Tohru Murai, the owner of the Japanese brewery Momokawa, partnered with a native Oregonian named Griffith Frost to import sake from Momokawa, among others Japanese breweries. As Americans’ appetite for sake boomed, the pair came to see an opportunity for local production. In 1997 they built a local brewery and changed the name to Sake One. The company continues to import from Momokawa, which maintains a minority stake in Sake One.

There are only a handful of sake companies brewing in the United States, the majority of them satellite operations of large Japanese breweries. (The Texas Sake Company is the exception to this rule, which has just started brewing and promises a line of craft and organic sakes). These large firms, located in the greater Sacramento region, import their premium sakes from their Japanese partners and focus almost exclusively on brewing entry level sake, known in Japanese as Futsu-shu, ubiquitously served piping hot at sushi joints across the country.

Sake One doesn’t make this kind of sake. “It should be served cold” says Greg, explaining how premium sake—jisake— expresses its full flavors when slightly chilled, like a white wine.

The sake making process begins by polishing one of the hundred varieties of sake rice, buffing away the husk and leaving only the starchy core. Makers of super premium sake–called Ginjo—will buff away as much as 70 percent of the grain to use only the purest starches at the center of the kernel.

The rice is then soaked, rinsed and boiled or steamed on a conveyer belt. A sampling of this steamed rice, known as the starter mash, is then inoculated with koji mold spores, where it sits for two days as the spores creates enzymes to break the starches into sugar which provide food for the yeast to convert into alcohol.

Water, yeast, lactic acid and freshly steamed rice are then added to the mash, and it is allowed to sit for two weeks. Once this starter mash is ready, more steamed rice and koji mold are added once a day for three days, with each addition doubling the volume of the mash every day. The entire mixture is left to ferment between 2 and 6 weeks in metal tanks. The sake is then pressed to separate the solids from the liquids, carbon filtered and pasteurized before bottling.

On paper, the process is deceivingly simple, but the most minute variations in any step can have deleterious effects on the final product. “You have to change your mindset from a human scale to the biological organism scale.” Says Greg, explaining how a one percent change in rice-to-water volume can destroy a batch.

***

Though myths of accidental sake fermentation can be traced back to China, where rice originated, it was the Japanese who popularized the drink. Early written reference span back to the third century Chinese history records of the Three Kingdoms, where mention is made of a ceremonial drink that made the Japanese “sing and dance.”

Sake was controlled by the Japanese government until the 10th century, when production rights were allotted to temples and shrines. It was not until the Mejji Restoration however, in 1868, that liberties were given to anyone with the money and knowledge to start their own operation, leading to an explosion of about 30,000 breweries. This number shrank to under 10,000 as the government—who in the late 1800s received more than 40 percent of their tax revenues exclusively from the sake industry—continued to increase taxes on production.

Currently there are about 1800 breweries operating in Japan, which has experienced a steady decline in sake consumption since its peak in 1976. Younger Japanese view sake as the drink of the older generation, and are instead adopting western drinks like beer and wine.

Sake was first brought to North America by Japanese immigrants via Hawaii, towards the end of the 19^th century. When the Japanese government slapped heavy tariffs on exports to the island, the immigrants started their own breweries. A second wave of sake popularization came with the return of solders who had developed a taste for the clear drink after the end of World War Two.

But Sake only began to move into the mainstream with the popularization of American sushi restaurants in the 60 and 70s. As Japanese breweries watched their sales dwindle locally and exports boom, many began building U.S. plants to exploit the new market.

***

“I am very lucky” says Greg, examining the machinery in Sake One’s brewing hall “as far as premium grade sake, this is the only facility like this in the United States.”

But while the equipment may be top of the line, the rice American sake brewers have access to isn’t one of the specialty varieties of sake rice. It’s table rice, California Rose.

Sake rice has a higher starch content concentrated in the center of the kernel as compared to table rice. The shell of the rice—composed largely of proteins and other enzymes—are polished away to reveal the starchy centers which provide a purer food for the yeast to convert into alcohol. “You can tell the difference,” says Greg, “the starting type of rice and the way it’s handled will give you distinctive styles.”

How much rice variety limits Greg from brewing the highest quality sake is a point of contention among experts. “It’s not the quality of the rice as much as its the quality of the manufacturing” says Beau Timken, sake expert and founder of the online retailer Sake Social.

“We keep getting better and better quality sake” says Greg, but concedes, “but we’re not going out brew Japanese people,” Referring to both the access to specialty sake rice and the hundreds of years of brewing experience the Japanese have on their American counterparts.

Even with limitations on rice varieties, Sake One has been able to consistently churn out award winning sakes. This is largely because of their attention to craft and small-batch operation, says Timken of Sake Social, who has followed the company from its inception. “These big brewers are beholding to their equipment,” he says “ Sake One doesn’t produce in that kind of volume, so they get to play.”

Greg has been playing for the last nine years, responding to customers wants and perfecting a premium American sake.

But he hasn’t done it alone. Momokawa, the company’s original partner regularly shares brewing expertise with Greg, inviting him to visit the Japanese brewery and sending delegates to work with him at Sake One.  “We are trying to honor the traditional way by making the best sake possible,” says Greg, “the better our sake gets; it’s honoring our ties with Japan.”

***

Since the 1990s, the American Sake market has grown between 10 to 15 percent each year, says Paul Tangauy of Lippling Bros. The growth—$150 million retail in 2009—has come with Americans’ growing appetite for sushi, as well as healthier Asian fusion cuisine.

“It’s more psychologically comfortable for people to drink sake with Asian style food.” Greg says, though he’s encouraging drinkers to break away from this limiting relationship. Still, he’s optimistic that Americans’ taste for sake will continue to expand. “lots of drinks start off as regional drinks,” he says, explaining how whisky was brought from Ireland and Scotland in the colonial days, and tequila from Mexico in the early 19^th century. “But we don’t think of all that anymore” he interrupts himself,  “we just think of it as a choice.”

U.S. beverage marketers have been at the forefront of trying to de-mystify that choice through elaborate ad campaigns, translating Japanese labels on imported bottles and promoting sake cocktails as an introduction to the drink.

Greg feels Sake One is well positioned to be at the forefront of this American adoption, explaining how the company can better connect with the American drinker because their sake is brewed and tasted by an all American staff. “So we’re going to almost subconsciously choose flavors according to our pallets” he says “and that’s basically what we’re finding; our sensibilities tend to mirror the average American pallet.”  This approach lead the company to introduce a flavored sake line in 2001, with varieties such as Asian Pear and Coconut Lemongrass.

Oregonians have caught on quickly. The state leads the country in per capital consumption of sake. “I’d say it’s the culture of Oregon: The independent thinking restaurateurs having their chef-driven accounts instead of restaurant sales.” says Marcus Pakiser director of the sake category at Colombia Distributing. The freedom lets chefs experiment, and many are doing so by offering premium sake menus.

The majority of premium sake consumed in the United States is still overwhelmingly Japanese, but Greg says the company has distinct local advantages that could help it compete. Sake is best consumed fresh, only 2 weeks after bottling. So brewing and selling locally—96% of the company’s sales are within the U.S, 14% in Oregon—allow Sake One to bypass expensive shipping costs and import/export taxes their Japanese counterparts must calculate into their operation.

The company’s growth is testament to such advantages: revenues doubled from $3 million in 2006 to about $6 million in 2010, far outpacing the annual growth of 10 to 15 percent nationwide, according to the company’s CEO, Steve Vuylsteke.

But the American sake industry is still in its infancy and has a long way to go before being considered alongside Oregon craft staples such as beer and wine. “I’m definitely optimistic” says Greg, citing healthy growth even throughout the recession. “Sake has this rich refined tradition and history; it’s just new to us.”

Ilie Mitaru is the editor of Stake.

The magazine has been moving forward smoothly, we’ve been busy securing sponsorships and partnerships for our premier issue, Oregon Built. And while we can’t reveal any names yet, we’ve been blown away by the community’s support for our mission of providing an alternative voice to the media-as-usual business press. Our supporters understand that if we expect to fundamentally re-imagine business , we’re going to need a new business media to tell its story.  They also understand that their sponsorship will be seen -- on the iPad and online -- by an influential and forward thinking audience. (If you’re interested in advertising in Stake, email Ilie at ilie@stakemagazine.com for a media kit and more information).

That’s it for now, the crew is headed out in a few hours to shoot Greg Lorenz, head brewer at Sake One, in Forest Grove. We’ll post pictures shortly.

The Stake Team.

The movement is concerned with business that serves as a vehicle for creativity, ingenuity and human dignity; which asks fundamental questions about the shortfalls of our current commerce system and attempts to address them by creating new models to supplant obsolete ones.

Some of these companies solve pressing social and commercial problems. Some provide us with exquisite food and food-stuffs, some with beautiful and lasting products, clothing and art; still others with invaluable technologies and ingenious entertainment. No matter the industry, or even country, each of these companies functions with a consideration of the full spectrum of operational factors. Each in their own way is ultimately concerned with fostering and maintaining the economic, cultural and natural environments that allows for the continuation of their work for future generations.

The movement has been given little coverage by traditional business media however, because such outlets are ill-equipped to comprehensively cover this development. When they do provide coverage, it is superficial and decontextualized, as they frequently apply “Green” or “Fair-Trade” labels without addressing the implications of these labels and the movement as a whole.

Our job is to provide this context.

The businessmen and women running these companies come from across socioeconomic, generational, political and cultural divides, but are in firm agreement that there is something fundamentally wrong when jobs are shipped abroad, when our global landscape is ravaged, and our persons disrespected with miserable wages and working conditions.

This new business paradigm views community and environment, creativity, dedication and innovation in the private enterprise not as inextricably linked with greed and waste, but as diametrically opposed to it. We believe a business that is founded on the prior and decoupled from the latter is not only possible, it is happening all around us right now. And it deserves a voice.

We created Stake to acknowledge this viable alternative. We’re not ideological or dogmatic. But we are idealistic. We see a movement comprised of small, diverse and agile companies and economies as the best promise to addressing environmental, social and economic issues we must address.  And while we can’t yet say definitively what this new business will always look like, we’ll work our hardest to engage in an honest conversation about its models and evolution, its effects and challenges, to encourage and celebrate it; as we get to work building tomorrow’s companies.

We’ve been working with Nim Wunnan, founder of the Research Club, for a couple months now. He was kind enough to tap his network and find some brilliant folks to get our Kickstarter video shot.

The talk was a great opportunity to test drive the ideas behind a project I’ve been thinking about, and evolving, for a couple years now. Chances are it will keep evolving; we’ll figure out what works as we move forward and adjust. But the opportunity to speak to a community about a relatively multifaceted project helped contextualize what’s been stuck in my head for too long; some of it sounded compelling, some absurd.

Now the task is to scrap the absurd, keep the compelling, and continually refine the best way to summarize a project for which I have yet to find a simple summary.

But overall, I was very pleased with the talk and the response from folks attending – many of whom snagged me afterward because they wanted to get involved. Thanks to the Research Club and Kristin Wolf for the pics.