Questions about coworking models
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jmproffitt
Mar 18, 2009, 9:24:37 PM3/18/09
to Coworking
As we're evaluating whether/how to start a coworking office in the
Anchorage area, it strikes me that there's a spectrum of possible
approaches.
On the one hand, there's the sort of "retail" coworking space where
people simply rent desks by the day, week, month, etc. The space is
helpful to those participating simply by being there. Camaraderie is a
welcome byproduct, but not a primary goal. This business approach is a
pure for-profit play that must make money for the owner(s) to remain
viable.
At the other end of the spectrum is the break-even "community"
coworking space where the objective is to support independent digital
workers and even foster community amongst them. It might even be an
advocacy space that promotes the businesses that participate in the
coworking venture. In this case, the coworking space might make money,
but that's a byproduct of the venture rather than the primary goal.
And then there's a spectrum of variations in between these two models.
A few questions...
[1] Does that description sound about right to you?
[2] Is one model more "sustainable" than the other, or is it too early
to tell? Put another way, is the for-profit model more sustainable
because the profit motive draws in enough cash to keep going (and
offers the owner incentive to keep it going), or is the not-for-profit
model more sustainable because the participants are mutually committed
to a shared success?
[3] Has anyone out there created a coworking space that you would say
has split the two models down the middle, making SOME money but also
actively providing support for participating coworkers by playing
connector / booster?
--John
jmproffitt [at] gmail [dot] com
@jmproffitt
Anchorage area, it strikes me that there's a spectrum of possible
approaches.
On the one hand, there's the sort of "retail" coworking space where
people simply rent desks by the day, week, month, etc. The space is
helpful to those participating simply by being there. Camaraderie is a
welcome byproduct, but not a primary goal. This business approach is a
pure for-profit play that must make money for the owner(s) to remain
viable.
At the other end of the spectrum is the break-even "community"
coworking space where the objective is to support independent digital
workers and even foster community amongst them. It might even be an
advocacy space that promotes the businesses that participate in the
coworking venture. In this case, the coworking space might make money,
but that's a byproduct of the venture rather than the primary goal.
And then there's a spectrum of variations in between these two models.
A few questions...
[1] Does that description sound about right to you?
[2] Is one model more "sustainable" than the other, or is it too early
to tell? Put another way, is the for-profit model more sustainable
because the profit motive draws in enough cash to keep going (and
offers the owner incentive to keep it going), or is the not-for-profit
model more sustainable because the participants are mutually committed
to a shared success?
[3] Has anyone out there created a coworking space that you would say
has split the two models down the middle, making SOME money but also
actively providing support for participating coworkers by playing
connector / booster?
--John
jmproffitt [at] gmail [dot] com
@jmproffitt
Geoff DiMasi
Mar 19, 2009, 10:23:26 AM3/19/09
to cowo...@googlegroups.com
Hi Jim,
Our model was break-even, but we bring in more money than our costs right now.
Our plan is to reinvest in the community (new space, etc), but I think
the goal should be sustainability and you will split the difference on
those 2 models.
---
Geoff DiMasi
Independents Hall
Our model was break-even, but we bring in more money than our costs right now.
Our plan is to reinvest in the community (new space, etc), but I think
the goal should be sustainability and you will split the difference on
those 2 models.
---
Geoff DiMasi
Independents Hall
Tony Bacigalupo
Mar 19, 2009, 10:31:54 AM3/19/09
to cowo...@googlegroups.com
Hi John!
[1] Does that description sound about right to you?
In my opinion, yes and no. There's most certainly a wide spectrum, but a space where camaraderie is merely a byproduct is not much of a coworking space. Regardless of how profitable you intend to be, the emphasis on building a healthy community has to be there.
[2] Is one model more "sustainable" than the other, or is it too early
to tell? Put another way, is the for-profit model more sustainable
because the profit motive draws in enough cash to keep going (and
offers the owner incentive to keep it going), or is the not-for-profit
model more sustainable because the participants are mutually committed
to a shared success?
I think it's a little of both. To be sustainable, you need to create a space that's profitable enough to sustain a part- or full-time manager (which could be the owner), but whether the owner wants to make money off the space depends on their intentions and what they get out of it. Many spaces are extensions of the founders' existing agencies, so while the space only breaks even, they are afforded the benefits of having great people come and work in their space.
[3] Has anyone out there created a coworking space that you would say
has split the two models down the middle, making SOME money but also
actively providing support for participating coworkers by playing
connector / booster?
I think many or most of the coworking spaces are trying to strike that balance.
I'm currently a fan of the phrase "not just for profit," as I think it embodies where many of us are going with our efforts.
Good stuff to discuss!
Tony Bacigalupo
------------------------
Coworking: http://nwcny.com
Recession: http://runwayproject.org
Personal: http://tonybacigalupo.com
Chris Conrey
Mar 19, 2009, 12:22:45 PM3/19/09
to cowo...@googlegroups.com
>>[1] Does that description sound about right to you?
Not really, I think its less black and white - with a ton more gray areas in between.
>>[2] Is one model more "sustainable" than the other, or is it too early
to tell? Put another way, is the for-profit model more sustainable
because the profit motive draws in enough cash to keep going (and
offers the owner incentive to keep it going), or is the not-for-profit
model more sustainable because the participants are mutually committed
to a shared success?
to tell? Put another way, is the for-profit model more sustainable
because the profit motive draws in enough cash to keep going (and
offers the owner incentive to keep it going), or is the not-for-profit
model more sustainable because the participants are mutually committed
to a shared success?
I think obviously if you can strike the balance with the for-profit model and have the right people there - then it is certainly sustainable, but I think your reason for the not-for-profit being sustainable is backwards. It is going to be a small core of people that sustain the not-for-profit model - the majority of people will be freeloaders (I couldn't think of a less pejorative term to use). Not in that they are leeching off of the others for their own profit, but that they are going to be unable to contribute financially yet their community influence or skills are going to be irreplaceable.
>>[3] Has anyone out there created a coworking space that you would say
has split the two models down the middle, making SOME money but also
actively providing support for participating coworkers by playing
connector / booster?
has split the two models down the middle, making SOME money but also
actively providing support for participating coworkers by playing
connector / booster?
I would imagine nearly everyone in this group who runs a co-working space will say that they are walking that razor edge every day. I know that we at Gangplank do aim to make some money to support our endeavours here but it comes a distant second to growing the community in Phoenix and enriching the environment.
On Wed, Mar 18, 2009 at 6:24 PM, jmproffitt <jmpro...@gmail.com> wrote:
As we're evaluating whether/how to start a coworking office in the
Anchorage area, it strikes me that there's a spectrum of possible
approaches.
On the one hand, there's the sort of "retail" coworking space where
people simply rent desks by the day, week, month, etc. The space is
helpful to those participating simply by being there. Camaraderie is a
welcome byproduct, but not a primary goal. This business approach is a
pure for-profit play that must make money for the owner(s) to remain
viable.
At the other end of the spectrum is the break-even "community"
coworking space where the objective is to support independent digital
workers and even foster community amongst them. It might even be an
advocacy space that promotes the businesses that participate in the
coworking venture. In this case, the coworking space might make money,
but that's a byproduct of the venture rather than the primary goal.
And then there's a spectrum of variations in between these two models.
A few questions...
John Proffitt
Mar 19, 2009, 2:32:03 PM3/19/09
to cowo...@googlegroups.com
Wow! Great answers from Chris and Tony and Geoff. I really appreciate the insights.
Just from reviewing the coworking web sites out there and talking to a couple folks directly involved, it does seem as though it's a blended mission/service that's most prevalent.
I've been considering whether I could run a coworking business as a primary income stream, but all my calculations so far suggest that that's just not feasible (of course, I could be way off on calculations -- I've only just started in the last week). Seems like I'd need to be doing contracting/consulting work of my own on the side, or combine the coworking stuff with another part-time job.
Anyway, thanks for the insights! I have another question, but I'll post it separately.
--John
Just from reviewing the coworking web sites out there and talking to a couple folks directly involved, it does seem as though it's a blended mission/service that's most prevalent.
I've been considering whether I could run a coworking business as a primary income stream, but all my calculations so far suggest that that's just not feasible (of course, I could be way off on calculations -- I've only just started in the last week). Seems like I'd need to be doing contracting/consulting work of my own on the side, or combine the coworking stuff with another part-time job.
Anyway, thanks for the insights! I have another question, but I'll post it separately.
--John
Chris Conrey
Mar 19, 2009, 2:51:48 PM3/19/09
to cowo...@googlegroups.com
John it is my true belief that if you run a co-working space with the primary intent to be a revenue stream you will fail. Not because of the math, but because people won't find it to be authentic. There is a "real"ness that is necessary to have a successful working space. There a many models for how it can work - but I don't know of anyone who is using co-working as their business model successfully.
Alex Hillman
Mar 19, 2009, 3:12:06 PM3/19/09
to cowo...@googlegroups.com
To riff on Chris's point, I feel like my decision making abilities are always in the communities best interest and that fact is never at risk of being dissolved into my interest in a bigger paycheck.
I make plenty of money from the things that coworking has enabled me to do without making money directly from renting desks.
-Alex
--
-----
--
-----
Alex Hillman
im always developing something
digital: al...@weknowhtml.com
helpful: www.unstick.me
visual: www.dangerouslyawesome.com
local: www.indyhall.org
I make plenty of money from the things that coworking has enabled me to do without making money directly from renting desks.
-Alex
--
-----
--
-----
Alex Hillman
im always developing something
digital: al...@weknowhtml.com
helpful: www.unstick.me
visual: www.dangerouslyawesome.com
local: www.indyhall.org
2009/3/19 Chris Conrey <con...@chrisconrey.com>
John Proffitt
Mar 19, 2009, 3:32:40 PM3/19/09
to cowo...@googlegroups.com
Alex -- When you say you've made plenty of money from your other activities, would that be your weknowhtml.com work?
Because that's more or less the angle I'm considering -- yes, setup the coworking space and strengthen the digital indepdents community around it, but also work separately on projects I can scare up in IT, web, new media / social media areas.
--John
Because that's more or less the angle I'm considering -- yes, setup the coworking space and strengthen the digital indepdents community around it, but also work separately on projects I can scare up in IT, web, new media / social media areas.
--John
Chris Conrey
Mar 19, 2009, 4:42:55 PM3/19/09
to cowo...@googlegroups.com
Not to answer for Alex but we pay the bills with our Ruby on Rails consulting firm Integrum, and make the Gangplank related decisions to focus on the community.
Richard Perks
Mar 20, 2009, 5:54:12 PM3/20/09
to Coworking
I think community and profit are two different and perpendicular
dimensions, not part of the same continuum. Imagine a graph with
Importance of Community on the vertical and Importance of Profit on
the horizontal. Places that have wifi hotspots as an inducement for
people to come to their regular business (e.g. Starbucks) would be in
the lower right quadrant, high profit and low community. A local jelly
group or the people here would be in the upper left, low profit but
high community. City wifi programs (not in it to make any money, not
in it to bring a community together, yet still providing enabling
services) would fall into the lower left quadrant. The question, then
is whether you can get into the upper right where both profit and
community are important.
I don't know if you can get there providing only coworking space (it
kind of sounds like not) but maybe if you provide some other goods or
services that can provide a symbiotic relationship with the coworking.
For instance, a coffeeshop/coworking space can work together; people
used to the coffeeshop-with-wifi model can be attracted to the
community and comaraderie of your coworking, and your coworkers can
provide a ready pool of customers for coffee and snacks. By the same
token, I think your web/social media business could complement your
coworking community since some of your coworkers may be independent
businesses that might need web design services, etc. Someone else
pointed me to Cubes & Crayons who have coworking plus daycare services
for work-at-home parents. Or coworking could combine with a Mail Boxes
Etc.-type business that provides these independent businesses with
mail and shipping services.
I think the key to being a profitable coworking entity is to think
about what other goods and services the coworking community is in the
market for and find a way to fill one or more of those demands. If you
can find one that appeals to the general public as well, the two
aspects of your business ideally will reinforce each other, or at
least one could subsidize the other.
dimensions, not part of the same continuum. Imagine a graph with
Importance of Community on the vertical and Importance of Profit on
the horizontal. Places that have wifi hotspots as an inducement for
people to come to their regular business (e.g. Starbucks) would be in
the lower right quadrant, high profit and low community. A local jelly
group or the people here would be in the upper left, low profit but
high community. City wifi programs (not in it to make any money, not
in it to bring a community together, yet still providing enabling
services) would fall into the lower left quadrant. The question, then
is whether you can get into the upper right where both profit and
community are important.
I don't know if you can get there providing only coworking space (it
kind of sounds like not) but maybe if you provide some other goods or
services that can provide a symbiotic relationship with the coworking.
For instance, a coffeeshop/coworking space can work together; people
used to the coffeeshop-with-wifi model can be attracted to the
community and comaraderie of your coworking, and your coworkers can
provide a ready pool of customers for coffee and snacks. By the same
token, I think your web/social media business could complement your
coworking community since some of your coworkers may be independent
businesses that might need web design services, etc. Someone else
pointed me to Cubes & Crayons who have coworking plus daycare services
for work-at-home parents. Or coworking could combine with a Mail Boxes
Etc.-type business that provides these independent businesses with
mail and shipping services.
I think the key to being a profitable coworking entity is to think
about what other goods and services the coworking community is in the
market for and find a way to fill one or more of those demands. If you
can find one that appeals to the general public as well, the two
aspects of your business ideally will reinforce each other, or at
least one could subsidize the other.
Philippe Chetrit
Mar 24, 2009, 6:29:47 PM3/24/09
to Coworking
Hmmmm. This is a great discussion. I believe, to be sustainable you
have to be profitable and you have to focus on your community. A
coworking space requires a lot of work and down the line, as an owner,
you will get very frustrated with a financial ball-and-chain. A
profitable coworking space and a great culture are not mutually
exclusive. We run a profitable space which supports local
entrepreneurs and creatives and we have a developed and maintained a
very democratically run, collaborative, nurturing space. The key is
understanding your metrics and their direct factors. Profitability is
tied to quantity of space and space distribution. Culture is tied to
programs, space design, member procurement and communication. For us,
space and culture are our core businesses and we focus on both equally
and it has been working.
Philippe Chetrit
Affinity Lab
www.affinitylab.com
have to be profitable and you have to focus on your community. A
coworking space requires a lot of work and down the line, as an owner,
you will get very frustrated with a financial ball-and-chain. A
profitable coworking space and a great culture are not mutually
exclusive. We run a profitable space which supports local
entrepreneurs and creatives and we have a developed and maintained a
very democratically run, collaborative, nurturing space. The key is
understanding your metrics and their direct factors. Profitability is
tied to quantity of space and space distribution. Culture is tied to
programs, space design, member procurement and communication. For us,
space and culture are our core businesses and we focus on both equally
and it has been working.
Philippe Chetrit
Affinity Lab
www.affinitylab.com
JR Moreau
Mar 26, 2009, 10:58:18 AM3/26/09
to Coworking
The matter of sustainably running a co-working space is something that
I have pondered quite a bit with friends/associates. Breaking even
doesn't leave much room for improvement to the space unless there was
a collective agreement or kitty to pull from for repairs or purchases
for the space. The space owner/catalyst will need to draw enough money
from the co-working community so that all bills are covered without
question and that there is some money left over. Also, the time of the
person who monitors the space must be taken into consideration.
Not that you would be paying someone to watch a space $20.00 an hour
because they'd probably be doing their own work too, but you have to
keep in mind that unless everyone took turns on a schedule watching
the place and administering anything that needed to be done, you'd
need to accommodate at least one person for their time.
This is the problem with having a "small" co-working space, which is
the model I'm working on now. Basically the number of people who join
the community feel the financial burden of the rent and administrative
fees more than if it was distributed to a larger group in a larger
space. It seems the small spaces with a small number of co-workers are
not impossible to maintain, but definitely are less sustainable if the
chemistry and financial situation are not just right.
James Ryan Moreau
http://jrmgetscreative.com
http://notsoliteral.blogspot.com
I have pondered quite a bit with friends/associates. Breaking even
doesn't leave much room for improvement to the space unless there was
a collective agreement or kitty to pull from for repairs or purchases
for the space. The space owner/catalyst will need to draw enough money
from the co-working community so that all bills are covered without
question and that there is some money left over. Also, the time of the
person who monitors the space must be taken into consideration.
Not that you would be paying someone to watch a space $20.00 an hour
because they'd probably be doing their own work too, but you have to
keep in mind that unless everyone took turns on a schedule watching
the place and administering anything that needed to be done, you'd
need to accommodate at least one person for their time.
This is the problem with having a "small" co-working space, which is
the model I'm working on now. Basically the number of people who join
the community feel the financial burden of the rent and administrative
fees more than if it was distributed to a larger group in a larger
space. It seems the small spaces with a small number of co-workers are
not impossible to maintain, but definitely are less sustainable if the
chemistry and financial situation are not just right.
James Ryan Moreau
http://jrmgetscreative.com
http://notsoliteral.blogspot.com
Julie of souk
Mar 26, 2009, 5:38:01 PM3/26/09
to Coworking
Great insights here, as always.
I echo the point that it is more gray than anything. So much is
determined by the motivation of the owner(s)/founder(s). What is it
that you want to achieve? Why? Then how?
We had and continue to have several motivations, and here are a few:
1) creating community and support for a new workforce that runs the
risk of isolation once they've broken free of " 'da man"
2) creating a space for education, workshops and connection (aka
networking)
3) definitely also wanted to start a business (my own personal
challenge)
In terms of making a profit vs. breaking even, I'm guessing no one is
psyched to lose money, and most are happy making just a bit of money.
Specifically though, in answer to your third point, souk fits into the
two models down the middle in that we make some money, but also play
that "connector/booster" role.
Cheers,
Julie Duryea
souk
http://www.soukllc.com
Portland, Oregon
@soukportland
I echo the point that it is more gray than anything. So much is
determined by the motivation of the owner(s)/founder(s). What is it
that you want to achieve? Why? Then how?
We had and continue to have several motivations, and here are a few:
1) creating community and support for a new workforce that runs the
risk of isolation once they've broken free of " 'da man"
2) creating a space for education, workshops and connection (aka
networking)
3) definitely also wanted to start a business (my own personal
challenge)
In terms of making a profit vs. breaking even, I'm guessing no one is
psyched to lose money, and most are happy making just a bit of money.
Specifically though, in answer to your third point, souk fits into the
two models down the middle in that we make some money, but also play
that "connector/booster" role.
Cheers,
Julie Duryea
souk
http://www.soukllc.com
Portland, Oregon
@soukportland
Fernando Maclen
Mar 27, 2009, 9:48:48 AM3/27/09
to Coworking
I really agree with most of the points being made above.
All I can add is just an insight on what we do here at the end of the
world:
We started as a "for profit" space. Then, throughout the first year we
started focusing in generating and taking close care of a small
community.
This year, we are adding value and applying some strategies that will
drive more money in so that we can re-invest in the space (move to a
bigger office, buy new equipment, pay for a full time manager, etc).
In our particular case, besides being the founder of a coworking space
I run a small creative agency that was formed inside it. This is the
one paying for my expenses right now since the coworking space is
barely breaking even with monthly costs, but even if that starts
making more money than costs the ultimate long term goal is to break
even and re-invest in the community whether possible.
Fernando Maclen
Cowork Central - Buenos Aires, Argentina
fern...@coworkcentral.com
http://www.coworkcentral.com
On Mar 26, 6:38 pm, Julie of souk <soukju...@gmail.com> wrote:
> Great insights here, as always.
>
> I echo the point that it is more gray than anything. So much is
> determined by the motivation of the owner(s)/founder(s). What is it
> that you want to achieve? Why? Then how?
>
> We had and continue to have several motivations, and here are a few:
> 1) creating community and support for a new workforce that runs the
> risk of isolation once they've broken free of " 'da man"
> 2) creating a space for education, workshops and connection (aka
> networking)
> 3) definitely also wanted to start a business (my own personal
> challenge)
>
> In terms of making a profit vs. breaking even, I'm guessing no one is
> psyched to lose money, and most are happy making just a bit of money.
> Specifically though, in answer to your third point, souk fits into the
> two models down the middle in that we make some money, but also play
> that "connector/booster" role.
>
> Cheers,
> Julie Duryea
> soukhttp://www.soukllc.com
All I can add is just an insight on what we do here at the end of the
world:
We started as a "for profit" space. Then, throughout the first year we
started focusing in generating and taking close care of a small
community.
This year, we are adding value and applying some strategies that will
drive more money in so that we can re-invest in the space (move to a
bigger office, buy new equipment, pay for a full time manager, etc).
In our particular case, besides being the founder of a coworking space
I run a small creative agency that was formed inside it. This is the
one paying for my expenses right now since the coworking space is
barely breaking even with monthly costs, but even if that starts
making more money than costs the ultimate long term goal is to break
even and re-invest in the community whether possible.
Fernando Maclen
Cowork Central - Buenos Aires, Argentina
fern...@coworkcentral.com
http://www.coworkcentral.com
On Mar 26, 6:38 pm, Julie of souk <soukju...@gmail.com> wrote:
> Great insights here, as always.
>
> I echo the point that it is more gray than anything. So much is
> determined by the motivation of the owner(s)/founder(s). What is it
> that you want to achieve? Why? Then how?
>
> We had and continue to have several motivations, and here are a few:
> 1) creating community and support for a new workforce that runs the
> risk of isolation once they've broken free of " 'da man"
> 2) creating a space for education, workshops and connection (aka
> networking)
> 3) definitely also wanted to start a business (my own personal
> challenge)
>
> In terms of making a profit vs. breaking even, I'm guessing no one is
> psyched to lose money, and most are happy making just a bit of money.
> Specifically though, in answer to your third point, souk fits into the
> two models down the middle in that we make some money, but also play
> that "connector/booster" role.
>
> Cheers,
> Julie Duryea
Trent
Mar 28, 2009, 12:23:37 PM3/28/09
to Coworking
John, we are creating a new space in the Dallas/Fort Worth area which
will open in about 30 days. Our first goal is to build "community".
This model is break even and hope to be profitable in year 2. Our
model is based on taking 12 months to get enough users to break even.
We have room for 15 people to sit and work at three levels, table,
desk, and semi-private cube. all spaces are arranged so everyone can
see each other, no confinement and the big table for 10 users is in
the middle of the space. We are hoping to get at least 25 members
with several in the "virtual" segment e.g. those who can come in, use
the coffee service, meet clients in the meeting room, have an address,
mailbox, but only use space when available. With this small of a
space we will break even at 15 users. This first facility will be to
test the market and see how it works and what we need to change. I
have a second facility designed which will accomodate up to 40 users
in 5 different levels which at 75% occupancy will be profitable and I
can make a living on it. The larger size will have issues in
building community amongst so many users and will take more staff or
"social directors". Hope this helps.
Trent
smartoffice.pro
will open in about 30 days. Our first goal is to build "community".
This model is break even and hope to be profitable in year 2. Our
model is based on taking 12 months to get enough users to break even.
We have room for 15 people to sit and work at three levels, table,
desk, and semi-private cube. all spaces are arranged so everyone can
see each other, no confinement and the big table for 10 users is in
the middle of the space. We are hoping to get at least 25 members
with several in the "virtual" segment e.g. those who can come in, use
the coffee service, meet clients in the meeting room, have an address,
mailbox, but only use space when available. With this small of a
space we will break even at 15 users. This first facility will be to
test the market and see how it works and what we need to change. I
have a second facility designed which will accomodate up to 40 users
in 5 different levels which at 75% occupancy will be profitable and I
can make a living on it. The larger size will have issues in
building community amongst so many users and will take more staff or
"social directors". Hope this helps.
Trent
smartoffice.pro
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