Incubators, Accelerators: threat to small coworking spaces?

[Robert Petrusz]

http://www.businessweek.com/articles/2013-03-14/waiting-for-the-accelerator-bubble-to-pop

At the upcoming "Triangle Entrepreneurship Week"  there is a panel presentation on "Co-working in the Triangle". The panelists are all accelerators or incubators. None of the local coworking spaces are invited to participate. 

Here is something I apparently worry about more than other coworking space owners: last I heard there were almost 700 incubators in America. "Incubators" are now not so cool anymore, so lots of folks seem to be switching to an "acclerator model". Its not clear that they will do any better than incubators that failed. 

Is anyone else worried that SEVEN HUNDRED incubators & accelerators in america could suddenly decide that they need to become coworking spaces?! There are also about 700 coworking spaces in america. Imagine a world where every single coworking space was suddenly competing with an incubator/accelerator that was funded by the local city/chamber of commerce/university/VC community. 

These new entrants can cause lots of trouble, especially in small markets where they can outspend a small coworking space by a factor of 10, easily. 

Anyone else pondering these types of issues? 

Robert 

Bull City Coworking

[Alex Hillman]

This entire argument is based on the fact that coworking spaces and incubators have the same "clients". 

Meanwhile, contrary to what the press spouts, all of the research I can find shows that coworking spaces are still dominated by independents, freelancers, and remote workers...NOT startups. To that end, an incubators' entire business model (up and out) doesn't work for the majority of coworking's audience, even as they adjust to become "accelerators" (whatever the heck that means). 

An accelerator is less competition for coworking than the living rooms, home offices, and kitchens of the 17+ MILLION independent workers (and that's a US only stat from 2012, up almost a million from the year before. 

-Alex

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[Tom Brandt]

That has certainly been our experience. The University of Michigan, the city of Ann Arbor, the state of Michigan, and various private enterprises have spun up all manner of incubators, accelerators, and [your favorite buzzword here], and yet Workantile hums right along because none of those things are friendly to independents and remote workers, who are the core of Workantile's membership. In fact, we will refer people to the incubators if they are a better fit with them than they are with Workantile. And the couple of the incubators that are on the ball will refer people to us if they think we are a better fit.

So we don't look on incubators as competition, but as complements to our community.

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@twbrandt

[rachel young]

Robert,

I'm going to use the term "genuine coworking space" in a few parts of this reply. I've been using this term lately to distinguish between the kind of spaces that I know you and I have vs when a space that calls themselves coworking (especially now that the word is gaining traction and it's hip/cool/marketable), but they are really an executive suite, business centre, or touchdown space that doesn't foster a community or encourage collaboration. 

So, how would you feel if there were suddenly 700 more genuine coworking spaces opened in the USA? That would be cool, wouldn't it? Globally we've been growing at a pretty fast rate.

And how would you feel if there were another 10 genuine coworking spaces that suddenly opened in your city? To me that would be cool too, but then again I am a huge advocate for the power of working collectively with other coworking spaces to raise the profile of coworking across a region (city, province/state, country, etc), and more spaces means more options for freelancers, since every space is unique.

If they are simply slapping on the term coworking or rebranding as a coworking space without exhibiting the core values of coworking, then they simply aren't a coworking space and their new name or branding won't make them so.   If someone is looking for a genuine coworking space and goes to one of these 700 spaces that are essentially a wolf in sheep's clothing, then either they'll think that's coworking and that's it, or they'll move on to try another space, and that's up to the individual to interpret what they do/need/want.

Yeah, it irks me that there are spaces that call themselves coworking and aren't genuine coworking spaces. We've got some heavy hitters here in Toronto who do that. They aren't going to change, though. It's a great marketing opportunity for them, and some of them have seemingly unlimited funds to throw at it.  In the end that will probably benefit those of us who are genuine coworking spaces, and certainly for those who are looking to work from  genuine coworking spaces.

That said, many incubators and accelerators are VC funded, and if their model simply isn't working, then they are more likely to pay out the lease or negotiate an early end and close their doors rather than waste money to change models to a different industry. That's a business decision, not a community decision.

As for the event you listed, I would contact them and offer your speaking services to join the panel discussion. We had that here, where the business incubators meetup was having a discussion about the best practices for coworking, and one of my fellow coworking space owners was invited to the event. She asked who from the coworking community was on the panel, and the organiser said there wasn't anyone. She laughed and said "how can you have a discussion about coworking best practices if you don't have anyone from the coworking community on the panel?"  Shortly thereafter, I was invited to sit on the panel, as the sole genuine coworking space owner/operator.  I say we should crash those parties and talks and meetups and networking events, and always be the voice to clearly define what a coworking space is and how it differs from other kinds of spaces. Tell them, right there at their own event, and then ask how you can help and offer collaboration so that everyone has a chance at success in the end. If they see you're willing to collaborate, maybe they'll be more inclined to as well.

r.

____________________
rachel young
rac...@camaraderie.ca

We're now at 2241 Dundas St W, 3rd floor

(between Bloor and Roncesvalles)

Toronto, ON  M6R 1X6

See details at http://bit.ly/MovingToRoncy.

Find us online:
Website/blog and Newsletter

Google+, Twitter, Facebook, and LinkedIn

We're a proud member of 

CoworkingToronto, CoworkingOntario, 

and CoworkingCanada!

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[Alex Hillman]

As for the event you listed, I would contact them and offer your speaking services to join the panel discussion. We had that here, where the business incubators meetup was having a discussion about the best practices for coworking, and one of my fellow coworking space owners was invited to the event. She asked who from the coworking community was on the panel, and the organiser said there wasn't anyone. She laughed and said "how can you have a discussion about coworking best practices if you don't have anyone from the coworking community on the panel?"  Shortly thereafter, I was invited to sit on the panel, as the sole genuine coworking space owner/operator.  I say we should crash those parties and talks and meetups and networking events, and always be the voice to clearly define what a coworking space is and how it differs from other kinds of spaces. Tell them, right there at their own event, and then ask how you can help and offer collaboration so that everyone has a chance at success in the end. If they see you're willing to collaborate, maybe they'll be more inclined to as well.

I love this advice, and in my experience, these audiences tend to be appreciative. You can ignore the periodic asshole, there's one in every bunch (side-story: I once had a guy at a biz center meetup try to convince me that I was a fool for not renting filing cabinets because that I was leaving money on the table. He actually got aggressive about it, insisting that our models aren't "at all different" and I was just being stupid. Tony had to talk me down). 

To add to Rachel's experience, I've found that while they have a lot to learn from us, we shouldn't underestimate what we can learn from these "competitive"(sic) forces, either. Look past the surface level "features" and language that turns you off. Actually listen closer. Funding might be the most visible pattern that these alternatives have as an advantage, but it's also the most superficial. Once you peel a couple of layers of the onion away, you can be able to be a lot more confident in our differences AND similarities. 

-Alex

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[ROB C.]

I think you are right in that anything that has strong financial backing could cause some havoc in a smaller market, but therein lies the reason why, if there is going to be any shake up, it's more likely to happen in larger markets.  If your operation has investors, as a company you need to focus more on returning funds to those investors.  Immediately, that will likely cause any VC backed operations shy away from entrance into smaller markets.  They will likely target larger markets where they can play a numbers game to get a return faster.  

Other things to consider is, if they do it right, it can be a long road at times to get a community built, engaged and sustained before the space is obtained.  The only advantage that one of these may have is that they will have a space, or funding to deploy quicker.  But I don't see that they will be any better an creating and sustaining community than anyone else.

The other factor is that according to Deskmag, 94% of people in current coworking spaces stick with their space and don't plan to leave.  This means that the main area that competition is liable to arise is in attracting new clients.  An established community that has grown organically, is going to have a stronger bond and staying power when it comes to an new entrant who wants to "build a better burger" because of that community connection.  You may see a small amount of turn to a new space, but I would not expect that to be significant, based on where the numbers are now.  

You also have wants of the community to consider and whether there is even enough interest or support for an additional coworking space in a given area.  In a larger city it may be more easily supported.  But in a smaller one, you are liable to see those spaces that try to convert shutter up when they realized the community cannot or will not support two  or more spaces.  And if that starts to happen, if these spaces convert to coworking and then start closing, that is where I think you will see the greatest impact on the coworking community.  Because to people who aren't paying close attention or in the trenches, it is liable to look like a bunch of coworking spaces opened and then closed, signaling that the concept wasn't working out. 

That's my two cents. 

Rob C.

[Robert Petrusz]

Hi all,

Thanks for all the great comments. 

I do want to clarify to everyone, especially to anyone else out there reading this, that I believe that in the long run coworking spaces will be part of a new normal and they have nothing to fear from incubators or accelerators. I also agree completely with Alex's comment that incubators/accelerators serve a completely different group of people. 

Tom's comments from Workantile sound familiar... we see similar patterns here in the Carolinas. 

Rachel - I would LOVE to see 10 more real coworking spaces in my hometown. In fact, I keep telling folks locally to please accept it because it will happen. I would also LOVE to see 700 genuine coworking spaces in america. And honestly, I think it will happen. 

I just think that outside of big metros, building a viable space is a very different ballgame... its no comfort to the small space owner that a year or two later when the giant space goes out of business and everyone in town says, "yeah, your space was so much nicer". That space owner feels burned. They have moved on. And their town is poorer for that fact. 

I really do believe that coworking spaces will be a part of the new normal and will be as normal a part of the landscape as restaurants within a few years. I am proud to be a part of the movement. But it does pain me somewhat to think of all the "little guys" who are doing things right and are simply copied and marginalized in their communities. 

Rachel, your idea about offering to provide another space owner for the panel is excellent.  I'll keep you guys posted. 

Robert 

[keeva kase]

Robert,

Thank you for this post and all the insight that followed from others. I am the facilitator of this panel and you can expect an email from me in 2 minutes.

Keeva

On Wednesday, August 28, 2013 11:54:36 PM UTC-4, Robert Petrusz wrote:

[rachel young]

Keeva,

If you don't mind replying to this group, I'm certainly interested in reading your response, and others here may as well.

r.

____________________
rachel young
rac...@camaraderie.ca

We're now at 2241 Dundas St W, 3rd floor

(between Bloor and Roncesvalles)

Toronto, ON  M6R 1X6

See details at http://bit.ly/MovingToRoncy.

Find us online:
Website/blog and Newsletter

Google+, Twitter, Facebook, and LinkedIn

We're a proud member of 

CoworkingToronto, CoworkingOntario, 

and CoworkingCanada!

--

[Keeva Kase]

I'm waiting to hear back from Robert, but I've gained permission from the event organizers to invite him and others to rep coworking. I invite a total of theee. I did not arrange the attendees, but am glad to have caught this oversight. 

Sent from my iPhone

[Robert Petrusz]

HI all, 

Three cheers for TEW panel moderator, Keeva Kase, who discovered our discussion on the google coworking group and worked hard to track me down and invite me and the Katie from Mercury Studio and Vinci from the Perch. 

It was last minute, so Vinci couldn't make it, but Katie and I did and I got to sit on the panel. I think it was a good panel discussion. 

And it was very encouraging to see interaction among the different spaces in the area in a way that I have seen in other cities but has been sorely lacking in the triangle. 

I hope its a good omen. :-)

Big thanks to Keeva Kase of Bull City Forward for making this happen! 

Robert 

[Daniel T]

On Thursday, August 29, 2013 9:38:52 AM UTC-4, ruyoung wrote:

That said, many incubators and accelerators are VC funded, and if their model simply isn't working, then they are more likely to pay out the lease or negotiate an early end and close their doors rather than waste money to change models to a different industry. That's a business decision, not a community decision.

I would have to agree with Rachel that the current rush of VC funding for accelerators is fueled by the dream of getting in on the ground floor of the next Google or Facebook, and they will soon realize that the ROI isn't there. Winning that game would require not hundreds of accelerators but thousands. What is being sold as an invetment will soon start to look like a charity project.

 

Our big concern shouldn't be that they will take over, but that real coworking might pick up some of their failure stink when they go down. As such I'm thinking that coworking should not try to compete, but distance itself from accelerators and incubators and establish themselves as a more sustainable business model with an actual future.

[Ky Ekinci (Office Divvy ™)]

I'm chiming in late to this thread, I have had some thoughts I wanted to share on the topic, but only finding the time now.

Hope it's still welcome. :)

I do think there is a role for Coworking spaces as incubators to a certain extent, with a role more in the ideation-phase of a Startup.  And perhaps some in the early stages, with pre-seed and early seed startups.  

The community we serve is diverse, probably like much of you folks operating a coworking space, it includes sole-practitioners, solo-entrepreneurs, creatives, freelancers, and telecommuters, and definitely web, tech (and some other) Startups.  We've definitely seen Startups born within Office Divvy: Either with those who joined at the ideation or pre-seed stage, and some got created as a result of organic collaboration among members.

The landscape we operate in, Palm Coast & Flagler County, Florida, is semi-urban, and mostly suburban area.  The whole County's population is under 100,000.  Incubator, is just becoming a buzz word here recently; I see the County Administration little by little entertaining the idea of starting one.  In my opinion a "Business Incubator" is a passé concept. I hate to see already limited, and stretched tax dollars here wasted by starting a government-sponsored incubator.  Based on my observations, this type of an incubator often serves those involved in the incubator (a City, a County, a Higher Institution or a combination of all three) more than those intended to be served.  A good example of it is not far from where we operate: There is a University of Central Florida (UCF) Incubator in Daytona Beach, about 30-minutes from here, which mostly had been a sad story --empty, not finding proper "clients," and not really finding its own identity.  Recently, they also launched a sad attempt offering a "coworking" component as well --certainly that went nowhere.

I see the differentiation with the Coworking movement as a grassroots attempt; and not a top down, superficial effort. That is culturally parallel to the overall Startup culture.  It's nearly impossible for traditionally wired folks to start an entity or a space to help the true entrepreneur, the true Startup founder under what how they would imagine an incubator to be.  In that sense, I am not afraid of defending our space.  I believe that is the right thing to do for Office Divvy, as well as for the benefit of the community we live in.

I've done just that in this interview about our launch of a second location, by offering ideas in the portion on Coworking as An Incubator, and by talking about the types of businesses that will matter for economic development in the next decade or two: http://www.news-journalonline.com/article/20130922/BUSINESS/130929869/1033?p=1&tc=pg

Ky Ekinci

on twitter: @KyEkinci | @OfficeDivvy