Is Kommune on the verge of kollapse?
A multi-million project meant to kickstart Castlegate is reportedly in trouble, with former vendors and employees alleging chaos and mismanagement
By Victoria Munro
Less than ten minutes after I get off the phone with Adrian Hackett, one of two bosses of Kommune food hall, an email arrives in my inbox. Hackett is asking a colleague in his expensive Sheffield law firm how quickly he can secure an injunction against The Tribune, a court order that would gag us from publishing anything he has “written or said.” He has helpfully copied me in.
I have, he writes, “no intention to publish the actual story” about Kommune and his other companies in the former Co-op building in Castlegate. “Only some allegations from ex-traders and employees”.
I’d been warned that something like this — and the threats of a defamation lawsuit I receive both on the phone and later over email — might happen. Hackett also works as a solicitor, specialising in taxation services, and is a partner at the renowned law firm Freeths, something I’m told he’s not shy about mentioning in his dealings with traders and others at Kommune. “Every time he had a run-in with another company or every time he had a threat about money,” a former employee claims, “he would say ‘remind them the director of this company is a lawyer’.”
As for publishing the “actual story” about the Castle House project, which benefited from millions of pounds in government money and was intended to kickstart the regeneration of Castlegate, no one is making that easy. In response to my questions, Hackett insists that he and his school friend and business partner Nick Morgan have “offered to set out the very real story of the past six or seven years” but that it must be done “in a proper way”. When my editor (my editor is by this point begrudgingly involved) asks what this “proper way” would entail, things abruptly grind to a halt. “I am not permitted to have any communication with you,” Hackett writes soon after.
On the other hand, Hackett and Morgan’s critics have also put me in a difficult position; they are unwilling to go on record or even let me reveal information that would indicate who they are. Most say they fear legal action from Hackett, while others say they don’t want to be publicly associated with the Castle House project. “Every time it comes up I hear more and more ridiculous things, it slightly frustrates me,” one says. “It’s a chapter of my life I put an awful lot of work into and it gave me nothing but headaches.”
But people still talk, particularly in Sheffield. “It’s like a small village, especially in the cultural sector,” an ex-tenant tells me, adding that Hackett and Morgan have “both burned a lot of bridges in town”. Over the course of a month and a half, I have spoken to more than 15 people — including former employees, vendors and contractors — all of whom independently painted a picture of a project in serious financial trouble. “I was there when the gas got cut off and we had to close the building for the day,” one former employee says. Others say they constantly worried if and when their wages would appear in their bank accounts. Castle House is, they allege, less sturdy than its name might suggest.
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Kommune, the part of Castle House that the general public is most familiar with and the first to get up and running, opened its doors in March 2019 to a flurry of breathless publicity. It is a classic example of the kind of lightly-converted industrial space that Sheffield seems to go weak at the knees for — think the Pearl in Park Hill — although the lack of soft furnishings does mean even the sound of light chatter ricochets back at you. Vendors have come and gone over the years, for reasons we’ll discuss, but its current offer includes sushi, Szechuan, pizza, burgers, etc: the usual mix. Other than the odd pop of red, the colour of the Kommune logo, the colour scheme is all neutrals.
The backstory to this tastefully designed space, however, begins four years before the grand opening, when the government’s dream of creating a “Northern Powerhouse” was on its last legs. Sheffield City Council, alongside the councils of Leeds and Manchester, successfully bid for government funding to create a northern “tech hub” to nurture start-up companies, receiving £3.5million. As reported by Sheffield Digital, the council’s goal was always to place said hub in Castle House, in the hope it could act “as a catalyst for the regeneration of the wider Castlegate area”.
If tech hub to food hall seems like a long jump, stay with me. The council invited bids from local organisations to run the hub and, in late 2016, selected a proposal from Kollider Project, a company founded by Morgan, as the victor. The council was, a former council officer tells me, enamoured by Kollider Project’s promise that Castle House could be not only the tech hub that the government wanted but so much more. “The mix of uses was absolutely spot-on and exactly what the council wanted to happen in that building,” they say. Hackett and Morgan “deserve some credit” for “demonstrating that those old retail buildings can be reused in a positive way”.
The plan appears to have involved a group of companies with vastly different aims, working together to achieve joint success for the building and Sheffield as a whole: the Kollider group. Kollider Projects held the lease for the building and rented office space to tech companies, with an emphasis on supporting start-ups, which would be supported by Kollider Incubator. Said start-ups could also benefit from involvement in the “Eagle Lab,” the result of a partnership with Barclays. Kurious Arts, the creative arm of Kollider, sought to offer the same support for grass-roots artists and creatives, funding this work through a profit-making venture on the side, which has taken several different forms over the years. Kollider Social, meanwhile, would run Kommune, the food hall and retail space on the ground floor. (As suggested by the kommon thread running through these names, Hackett and Morgan are the directors of every one.)
While Hackett and Morgan are partners, one former contractor recalls that Morgan “never seemed to be particularly involved in any of the business decisions” and “seemed to spend most of his time on the third floor designing things on his Mac”. A former Kurious Arts employee said that, despite having Morgan as his boss, “it felt like Adrian had more of a say in what could and couldn’t be done”. (Morgan, a graphic designer, later tells me he deals with Kollider’s “creative vision,” while Hackett is in charge the “operational, management and funding element”.)
The former council officer is willing to concede that there was “always a little bit of an element of fantasy” in Kollider Project’s pitch but, at least at first, it seemed the fantasy was coming true. When Kommune opened, Hackett and Morgan had enlisted two well-respected businessmen from Sheffield’s hospitality industry to help them run it: Jon Perry from the coffee shop Tamper and Ben Smith from Depot Bakery. In its first year, the food hall was able to make a modest profit of just over £130,000 — not bad for a brand-new venture in a slightly run-down area of town — and those familiar with its first 18 months remember it as an optimistic period. “I have no complaints about Ben and Jon,” one former employee said, “They know how to run things and how to treat people.”
That same year, WANdisco — a Sheffield tech company which recently ran into trouble but was, at the time, very much on the up and up — announced they were moving staff into the recently completed office space of Castle House. This was, undeniably, an incredible coup for the project. At the time, Morgan told the Star that the firm’s presence at Kollider would “help to inspire the next generation of entrepreneurs in our city”.
But this halcyon period couldn’t last. During a nearly hour-long phone call with Morgan, he is keen to stress how bad the timing of the Covid-19 pandemic was for the fledgling project, especially Kommune. The food and drink vendors who traded there paid Kommune a percentage of their revenue rather than a flat fee, meaning income dropped to almost nothing during the lockdown. Morgan says Kommune “got very little support” during this period but “paid our rent and tried, wherever possible, to do the right thing” by keeping people employed.
Others say that even before the pandemic, cracks were starting to emerge. Hackett and Morgan, multiple people tell me, had been led to believe they would receive a special exemption from paying business rates. It eventually turned out that this was not the case when the company received a hefty back-dated bill. Utility bills also ended up costing far more than anticipated, while it emerged that the structure of the building made things like waste management and the delivery of supplies for the vendors difficult.
Hackett’s desired solution once lockdown began to ease, according to a source close to the business, was “to rip up every vendor’s contract and get them to sign a new one to pay Kommune more money”. One of the other directors, Smith, objected so strongly to this plan that it allegedly contributed to his voluntary departure from the company at the end of 2020. (The fourth director, Perry, also left near the end of 2021.)
Certainly, it was not long after Smith parted ways with Kommune when the new contracts were introduced. In addition to increasing the amount paid by each vendor, a former employee says, the company also flipped the payment system on its head. Whereas, until that point, vendors had collected revenue and paid Kommune their commission, now Kommune collected all the money and gave the vendors their portion back.
This change might have been fine, in theory, if not for the wider financial difficulties Kollider was suffering at the time. “They were using that money to pay outstanding bills and not paying vendors on time,” the former employee alleges, a claim supported by multiple other former staff and former vendors. The monthly meeting between Kommune’s management and its vendors regularly turned into a “screaming match,” according to an employee who left last year, where “the vendor that screamed loudest was the one they paid”.
Hackett admits there were, historically, issues with some payments not going through. However he insists such delays were resolved in “a day or two days” and were “inevitable,” given the challenges they had to overcome. While multiple sources allege delays could actually last weeks or even months, only one former vendor is able to provide a paper trail to evidence their claim, forwarding me an email that shows them chasing payment for a four-figure sum six months after it was due. Hackett seems to concede that costs like energy bills and rent had to take precedence. “That’s the nature of trying to keep this place alive,” he says. “If you don’t pay things in priority [order] then no one has a job.”
Some of Hackett and Morgan’s critics suggest that Kommune had a promising start but began to decline when Smith and Perry, the only two directors with experience in the hospitality industry, had both left. The way Hackett sees it, the exact opposite is true. When he and Morgan “took over” two years ago, Kommune was “an absolute car crash” and owed, he estimates, more than half a million pounds. He further claims that, when they “unravelled the systems,” it emerged Kommune was owed more than £60,000 by its own vendors. “I ended up paying £50,000 a month out of my own pocket to keep the place open,” he tells me during one of our calls. “People are complaining about payments, they should stand in my shoes.”
If he made such arguments to the vendors waiting to receive their own earnings, they fell on deaf ears. A former Kommune employee says this period marked “an exodus of the original vendors who had helped build the brand,” and even the departure of new ones. One former vendor told The Tribune they had only been in the building for a week before Hackett insisted on renegotiating the terms of their contract to increase the amount they would pay, which led to them choosing to walk away.
“What’s really unfortunate is that, at the start, Kommune had a successful business model,” one source said. “It needed to be tweaked and improved but it was successful. I genuinely believed it would transform that part of the city.” Antics like ripping up the contracts or delayed payments demonstrated that Hackett and Morgan didn’t, in their opinion, “have the wider interests of their traders at heart” and were more invested in “propping up the failing business model” in the building’s upper floors.
Funnily enough, former employees of the upper floors take the opposite view. It was “common knowledge,” one ex-Kollider employee claims, that Kommune was “the biggest loser” in the building. A former Kurious Arts employee, who said they “still believe” in their specific company’s project, claimed it could have succeeded given enough time, if not for being hindered by the wider financial troubles. “The difficulty,” they argue, “was that the three companies were so interconnected that what [Kurious] wanted to achieve couldn’t be, because the money wasn’t forthcoming.”
Luckily, Hackett seemed from the outset to be brimming with bold ideas for how the Kollider group could make money. Former employees tell me he has, at various times, promised to create “the next Netflix” and “the next Amazon” and even his detractors say they cannot fault him for a lack of ambition. “The common theme was a laudable idea to do something different,” one former contractor said, “in a space where it has been done before.” The Kollider streaming service appears to have fallen by the wayside but, as one employee familiar with the project put it, “Adrian saw streaming as the next big thing, even though it was already the big thing.” Allstore, the alleged rival to Amazon, has yet to take off; the online shop has only 49 products for sale at the time of writing.
According to several accounts, Hackett is an intelligent, energetic man — but someone who “could never stick at anything for more than 10 seconds.” Former employees tell me this tendency made working at the company a stressful experience at times, particularly given the blame for each abandoned venture seemed to land at their feet. “Adrian would come up with these ideas and push staff into working on them, taking them away from their other responsibilities,” one recalls, but was disappointed if either their original responsibilities or the “new random project” didn’t come off. “People felt demoralised because they had failed at an arbitrary task Adrian had just decided on.”
According to separate accounts from multiple former employees, Hackett sometimes vented his displeasure in highly unprofessional ways. “He was very rude. He would literally shout at you and treat you in a very bad way, not professionally at all,” one former employee says. She recalls she once told Hackett something he asked her to do was not possible because of the company’s financial situation and he responded by “sending emails with everyone copied in saying I was incompetent and not doing my job”.
One former employee shared her resignation email from January this year with The Tribune, in which she wrote that Hackett’s “outright verbal abuse and petulant outbursts” was a major factor in her decision to leave. She cites an incident in which he allegedly ended a phone call with another member of staff and called her “a stupid fucking twat” in front of the entire office. “This was my first indication that the company was not what I had hoped,” her email adds.
Hackett firmly denies any abusive behaviour took place. “Disgruntled people,” such as those who lost their jobs, will “take out their anger in whatever way they can”. He claims Kollider’s HR manager reached out to the employee following her resignation email but never received a response, something the employee denies. During my phone call with Morgan, he says Hackett “has a high expectation of delivery,” but claims he’s had “no official complaints” about his business partner’s conduct.
Hackett also takes the slightly unusual step of encouraging me to contact the company’s HR manager, who admits they “did lack systems and procedures,” when she first joined in the summer of 2022, including a way of monitoring holiday entitlement. During her tenure, the company has put “very reasonable” measures in place but “not everyone was happy with the changes so a couple ended up resigning”. (The aforementioned resignation email claims nine other members of staff had left in a four month period.) For example, she says, some employees viewed the introduction of performance reviews “as confrontation,” which led to their departure. The current team “are all hard workers” and “have turned both Kommune and Kurious around”.
This last point is something Hackett is very keen to impress on me during the period when we are still on speaking terms. Kollider has undeniably weathered a difficult couple of years but is now, he claims, rising phoenix-like from the ashes. Kommune is “extremely well-run” and in the process of paying back the “enormous historic debt that [he and Morgan] inherited,” when they assumed sole control two years ago. Kurious Arts, meanwhile, is supporting the production of feature films, “becoming the envy of many other cities” and will apparently open a second hub in Madrid next year.
Such success would have been impossible, he points out, without a huge amount of time and money from both himself and Morgan, who have poured themselves into Castle House without making any profit for themselves. “This city needs good news stories,” he says, “and Kurious and Kommune are examples of how a group of wonderful people can succeed against all the odds.”
Former staff who were familiar with the financial situation as of late last year seem highly doubtful that anything short of a miracle could have turned things around for the companies. One claims Hackett is “flogging a dead horse,” adding: “I don’t know how the doors are still open.”
Actually, they haven’t always been. On 27th February, staff at Castle House — including workers at the National Videogame Museum, which rents space in the building — arrived to find the locks had been changed. It emerged that Kollider Projects was “in dispute” with the building’s owner, Northpoint CH, who had taken the extreme step of forfeiting their lease. In a since-deleted statement on the National Videogame Museum’s website, its co-CEOs wrote that this came “as a shock to the whole team, who were in a buoyant mood after such a positive school holiday week,” but that they were “optimistic about finding a resolution with Northpoint in the coming days”.
At the time of the lock-out, The Star reported Northpoint’s statement that Kollider Projects was “failing to comply with its obligations under its lease” but Hackett seems affronted at the people assuming that this means they were behind on their rent. He suggests the forfeiture was in fact payback for a “million-plus claim” Kollider previously lodged against Northpoint, over alleged issues with the refurbishment work done on the building. Both Northpoint and the charity that runs the National Videogame Museum politely declined to comment on the matter when I got in touch.
It’s easy to get lost in the twists and turns of the story as Hackett tells it; Morgan puts the matter a lot more simply. He and Hackett have, he says, “worked tirelessly, unpaid, for seven years to deliver something for the city because that’s what we committed to doing”. If they have weathered some set-backs, that is a consequence of the inherent risk in supporting start-up businesses, particularly at a time when “the whole of the UK is going through challenges” due to the pandemic and the cost-of-living crisis. “We started with an idea in a derelict, shuttered ex-department store in what was a very unloved part of town, which still has its issues.” Everything that has happened since, he claims, “has been a consequence of trying to do the right thing, and external factors”.
Certainly, most of the people I speak to say they were very much in favour of the project’s original idea, arguing its execution in the years since has been where it fell apart. “It’s a shame because I don’t want that Castle House project to fail,” the former council officer says, “It’s unfortunate that such a good idea is being owned by people with serious faults.” A former employee, who says they care deeply about Sheffield’s regeneration, insists the best outcome “would be Kollider going bust and somebody buying that building and running it instead”.
Throughout the process of reporting on this story, I’ve found myself a little confused that Hackett and Morgan were able to develop a compelling enough pitch to win the right to run a multi-million pound project. Hackett, despite how many people seem to tremble in fear of him, strikes me during our conversations and email exchange as a little scattered, almost vulnerable. Morgan, as he readily admits, is more interested in branding and design than the practicalities of running a business. Even if their detractors are wrong and they both have phenomenal business acumen, why on earth did the council decide a tax lawyer and a graphic designer were the right people for this job?
While staring at Companies House (my favourite pastime), a possible clue emerges. At the time Kollider Projects won the bid to run Castle House, Hackett was not actually a director, despite the fact he now seems to be running the show. Kollider Projects was founded in 2016 by Morgan, who was joined a few months later — around the time the company’s bid won and almost a year before Hackett assumed his current role — by another director whose name is conspicuously absent from the story so far: Steven Pette.
According to Pette’s LinkedIn, he couldn’t be more perfect to run a tech hub, boasting “years of experience gained within the entrepreneurial and start-up sector” and previous work with “large challenger brands” in the UK, USA and the Middle East. For reasons unknown, however, he decided to leave the company in February 2019, just a month before the doors to Castle House were about to open.
Pette’s involvement is another unresolved thread in the story — and another plot line you would never know about if you just came into Kommune to order some Szechuan food and a craft beer. In a sense, the messy, chaotic, highly-disputed story of what’s happened at Castle House is just a particularly extreme example of the risks of any regeneration project, where big ambitions can trip over themselves due to questionable execution and human flaws. Everyone wants Sheffield to have places that host independent vendors and develop local businesses and creativity. The question then becomes, who should be in charge?
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