Image for blog post with office buildings

The Coworking Value Proposition – Part 3 (Commercial Real Estate)

/in , , , , , /by

This part of our series will take a look into the value proposition of coworking for stakeholders on the commercial real estate side of the industry. To recap, we’re exploring the value proposition of coworking across all parts of the industry for coworking space owners and operators as a guide to craft compelling messaging to attract members and provide perspective on this fast growing industry as a whole.

Part 1 provided an overview of the potential for the coworking industry. Coworking spaces are helping drive the decentralization of the workplace. They provide a professional office environment wherever and whenever one is needed. Through these varied locations and thoughtful flexible workplace designs, coworking spaces can contribute directly to an increase in the productivity of the workforce. As the remote workforce grows, more and more of these spaces will be needed to satisfy that demand.

As discussed in Part 2, coworking spaces are the goldilocks solution for the distributed workforce. They are less rigid than a corporate HQ, more private than a coffee shop, and less isolated than a home office. Coworking spaces meet the professional needs of the distributed workforce, but they also help meet our personal needs by decreasing loneliness and increasing autonomy in how, where, and when to work.

Coworking spaces do not exist in a vacuum, however. They are dependent upon the infrastructure and supply of commercial real estate. The “space” part of the coworking model is critical.

How does the coworking model benefit stakeholders in commercial real estate? Is it a total disruption or inevitable evolution?

For the commercial real estate world, coworking represents a fundamental shift in how office space is leased & managed. It is an inevitable and necessary shift, however. Business today changes faster than ever. Company timelines that used to span decades are down to spanning years, decreasing their willingness to sign long term leases. Employees are distributed throughout the globe. To maintain revenue stability in the commercial real estate world, coworking must become part of the standard offering.

What are the benefits of coworking?

From a leasing perspective, coworking and flexible office space can increase occupancy rates. In fact, in 2018 alone, flexible workspace accounted for two-thirds of the occupancy gains in the U.S. Office market.

Coworking businesses can lease a wide variety of commercial real estate products including traditional office space, vacant retail space, or warehouse space. They frequently transform distressed properties into Class A space.

Once open, coworking businesses attract an expanded tenant pool compared to what a particular property or market would otherwise be able to attract, increasing the utilization of the property.

Why are these benefits valuable?

Real estate is an investment business, and that means it’s all about the numbers. An increase in occupancy rate for commercial real estate means more profit for building owners, across a variety of building types used by flexible workspace. Renovated & occupied buildings return higher building valuations, which means a better return on investment in the property. Additionally, once renovated, those properties can see higher rent premiums when compared to other similar properties. (Cowork Tahoe is a great example of this)

Cowork Tahoe – Before & After renovations of the former Tahoe Daily Tribune building in South Lake Tahoe, CA

Members of coworking spaces are predominantly small businesses, free-lancers, and startups. These are clients that would not otherwise rent office space on their own, or would have to rent lower quality properties. Many of these startups and small businesses are growing, so coworking is just the entry point into commercial office space for them. Coworking is part of a sales funnel that can lead to longer-term and larger contracts between landlords and tenants as smaller companies grow and take over more space. If that space is not available in their current coworking space, they may look for nearby options, increasing the value of commercial property in proximity to the coworking space.

What is the main problem being faced by customers?

The commercial real estate world has not adapted quickly enough to the changing dynamics and demands of the business world. Companies are less and less interested in signing 10-year+ leases, particularly when they don’t know if their own timeline spans beyond a few years. Landlords need to iterate on the traditional model in a way that still provides consistent and predictable revenue streams from their properties in order to protect their investments.

How does coworking solve this problem?

The popularity of coworking is driving demand for commercial square footage across a wide range of property types and markets: primary to rural, Class A to distressed, warehouse to retail space. The flexible workspace model is increasing occupancy rates & expanding tenant pools.

Coworking directly satisfies the demand for flexible & more distributed office space that companies need, but can also provide the predictable revenue stream of a longer term lease. Members are able to rent the professional office space they need at a lower rate than they would have access to if renting themselves, they get the flexibility of shorter terms, and more choice in terms of location.

Why is coworking the best solution to these problems?

The utilization of commercial real estate as coworking space helps to derisk development in new areas or markets by offering a diversified and scalable model that can expand or contract in reaction to the local market.

Its also what employees and employers are starting to ask for – the ability to work from anywhere. That means that high quality office space must be anywhere as well. The demand for flexible workspace is growing, and CRE has the supply & infrastructure to deliver on it.

Statistic about distributed workforce in the USA

What can indie coworking spaces learn from WeWork?

/in /by

The big news this week in the flexible workspace industry: WeWork’s S-1 and imminent IPO. If you are an independent coworking space operator, you may be wondering what it means for you.

The Movement

The distributed workforce is real, and it is gargantuan. While WeWork has 500+ locations worldwide and is growing like crazy, they’re barely scratching the surface of the market. There are 60M remote workers today and that number is growing every day. Many people believe it will grow to 100M in the next 4 years.

You can sleep well at night knowing that you’ve chosen a growth industry and the only thing that stands in your way is your own ability to run your business well.

Be Member-centric

WeWork does so well because they make decisions based on what their members want, not just what the business needs. They allocate a significant amount of space to private phone rooms because they know how crucial it is that their members always have a place to take a private call. They’re attuned to the local tastes and design their spaces accordingly. They provide high quality desks and chairs because that’s what their members want (and are willing to pay for).

Do you know how satisfied your members are? If they could wave a magic wand and change anything about the space, what would they change? Which improvements should you prioritize?

If you aren’t asking your members for feedback on a regular basis, you should. You might be surprised at what you discover.

Adaptability

WeWork has demonstrated that they’re prepared to weather an economic downturn by increasing the allocation of their memberships that are signed office leases. They’re flexible office leases, to be sure — not 5 or 10 year terms. But their ability to weather any storm is something we should all take a lesson from.

There are other market forces as well. How frequently do you change your pricing structure for flex memberships? When’s the last time you raised your prices? Do you set expectations with your members that such a thing is a possibility?

Another example of adaptability is your responsiveness to your member feedback. If you grow your membership, you’ll need to allocate your space differently. As an example, instead of building concrete walls into their locations, WeWork invests in movable walls. This way they can adjust both the size, price, and capacity of their space in accordance with market demand. Need more private rooms? No need for construction. Simply move the walls.

The WE brand

The We Company has developed a powerhouse of a brand, and has done so very intentionally and strategically. It is globally consistent while remaining locally unique. The company builds each location with a carefully curated aesthetic that incorporates not only the expected premium experience of a WeWork office space, but also including local tastes, culture, and aesthetics.

When a potential member walks into your space for the first time, have you already set expectations for the type of atmosphere they can expect? Are you meeting those expectations?

WeWork also knows how they impact everything else around a location, because they are tracking it. They even call it The WeWork Effect. This includes how a WeWork lease benefits landlords and its building valuation, surrounding communities, the companies their members are employees of, the environment, all of it. And they tell the story, a lot.

Flexibility

Flexibility is quickly becoming a key requirement for the modern workforce (that’s a post in itself). WeWork exudes this. Members don’t have to sign 10-year contracts for office space, they can sign up by the day. Members have flexibility by having locations where they need them, more than 500 globally and growing. Flexibility is in the types of workspaces that are available: desks, couches, private offices, large company suites, meeting rooms, phone booths, cafe style lounges.

Have you asked your members how they like to work? Do they prefer private spaces to focus or like the buzz of a casual cafe space? For your space, what is your most popular membership type and how do you know?

Predictability

WeWork membership agreements, while focusing on flexibility, are an average of 15 months. That brings a level of financial predictability that has not been standard in the coworking industry.

Day passes and month-to-month plans are part of what makes coworking such a desirable option. However, there can be a balance between providing customers with the ease of flexibility and having the financial security of revenue projections as a business.

Enterprise

WeWork shared that 40% of their memberships are now for enterprise clients, up from 28% just 2 years ago. These are companies with 500 or more employees. This is a quickly growing segment of coworking consumers as corporations move towards a more distributed workforce model.

They focus on the savings that corporations can expect using their locations on a per employee basis compared to a traditional corporate office. This hits right to the core of the 3/30/300 rule for total cost of occupancy.

Graph from p129 of the WeWork S-1 illustrating that a company can expect to save 57%-66% per employee compared to a standard lease.
From the WeWork S-1, p129

Profitability

WeWork’s new locations reach break even in 6 months on average and maturity within 24 months. Only 30% of their current locations have reached maturity and they are still opening more, and quickly.

Have you hit profitability, and on what timeline? If not, what do you need to do to get there?

Data, data, data

The We Company uses data for every decision: which building in which city to open a new location, what the design should be, how the workspace can make people more productive & how to track it.

What metrics are you tracking, or should you be?

What’s your strategy?

Many spaces simply open up shop and pray for business. This works reasonably well an astounding amount of time — but only for awhile. Once a competitor opens up across the street, or there is an economic downturn, many spaces discover just how much the success of their business relied on luck and timing.

Be the business that survives and thrives, despite competition. Know who your customers are, and go find them. Have the most satisfied members in town. Be always on the lookout for ways to capture more demand from that class of customers. Resist the temptation to say “yes” to every request, and instead put together a prioritized roadmap of who you’re going after as a customer, and why. Ask every single new customer how they heard about you, and be ravenous about getting more.

You might be surprised at how successful you can be by focusing on a niche rather than accepting any and all members. Imagine if WeWork moved in across the street; which customers would stay with you, and why? Which customers would jump ship?

Go talk to the customers who would stay and figure out why, and how to get more.

Coffee in a cup

Read this before you offer that free day pass

/in /by

Balancing Incentives with Good Business Practices.

Starting a new business is hard, it doesn’t matter what that business is. It takes a leap of faith to dedicate time and capital to something new. The process of creation, of bringing an idea from the early firings of neurons to the world marketplace, can be both exciting and terrifying. What makes this process even more difficult is that it’s done in isolation. The public only sees the product after it has been released into the wild. The development, the preparation, the hours and hours of sweat equity that go into getting the business to the point where its ready for public feedback are all done privately. But those efforts are vital and valuable, even if they go largely unrecognized.

I had a friend & fellow entrepreneur recently ask for advice about a business proposition that was giving her pause. She sells a hard goods product and has worked incredibly hard to develop and grow her business. A rental shop was interested in having her gear available for their customers, which was fantastic. It would provide great exposure and get customers testing her gear out. The caveat – they wanted her to provide it all for free in exchange for that exposure. They, however, would be benefitting from the rental revenue and cache associated with having a better offer for their clients. Was it worth the costs of manufacturing for the chance of brand recognition?

I told her no. I told her not to diminish the value of the core of her business, her gear, by giving it away like that.

It got me thinking about how I see this same situation in coworking all the time, through free day passes, or free trials. The core revenue generator for coworking is memberships. So why give that away for free? I don’t think we should.

When trying to build a customer base, it’s easy to lean towards doing anything and everything to get people in your door. If someone has never tried coworking, you want them to get a good taste for it and to picture themselves doing it, by actually doing it. However, there is a way to do that without removing the monetary value of what you are offering.

Free day passes and free trials aren’t loss leaders, they are just losses.

Especially if you are a new space and just starting out, it’s not a good idea to give away anything for free that you’d like to charge for. From my experience both in my own space & from talking to dozens of other coworking space operators, the conversion rates on the freemium model are terrible. Free coworking is called a coffee shop.

We really love coffee shops

To get customers, keep it simple (but not free).

What can you do instead? Here are a few quick ideas:

Events

  • Bring people through the door other ways – host events, support meetups, offer space to non-profits. At Cowork Tahoe, for example, we have members that host everything from Women in Networking lunches, Conversational Spanish happy hours, entrepreneur roundtables, and the newest idea, a “Yappy” Hour with the office pups & their owners. We have frequently host local artists & open our doors to the public for gallery nights, which brings in members of our broader community that would otherwise not think to schedule a tour. Our conversion rates for these events is excellent and they are super fun.

Promotions

  • Offer to host a specific Jelly* on a set day in lieu of more broad based free trials. This way, you can target your specific customer segment rather than hope someone will wander your way. We have seen great success with these when focused on something like a Summer break day for parents that work from home or a Freelancer Friday, for example.
  • Participate in International Coworking Day!
  • Create partnerships with other local businesses like hotels and provide a small discount for their clients if they are referred to you.

Guarantees

  • Upsell, upsell, upsell! Offer to apply the cost of a day pass to any purchased membership.
  • Offer a trial-period with a money-back guarantee. If they hated their experience, the internet went out, they signed up for a membership but can’t stand you after 2 days, then give them their money back without hassle.

By doing any of the above, the goodwill you are trying to establish is still there, but it goes both ways. A free day is only extending goodwill one direction, to them. Do yourself a favor and recognize that you are inviting them into a space and community you have poured blood, sweat, and tears into. When the value you are providing is clear, it will be recognized by your customers. And that is good for business.

 

Footnote: I HIGHLY recommend reading Alex Hillman’s post on this topic: https://dangerouslyawesome.com/2010/06/a-case-against-free-trial-coworking/

After drafting this out, I did a web search to see who else had an opinion on the topic and wasn’t in the least bit surprised to see that Alex had an incredibly thorough write up on it.

 

*If you’re curious about our name, jellyswitch, this should give you a big clue about its origin, but that’s for another post.

The lobby of Cowork Tahoe in South Lake Tahoe, California

Coworking & the 3/30/300 Rule of Thumb

/in /by

The lobby of Cowork Tahoe in South Lake Tahoe, CA. Photo credit: Erin Ebright.

Coworking & flexible office spaces are quickly becoming a permanent fixture in the global office space landscape. As more and more employees utilize these spaces, the gap between coworking & the traditional corporate office will continue to narrow. It is important for both corporations and for the owners & operators of these flexible workspaces to understand how this type of office environment fits into their operational model, and how it provides value.

As remote work increases, it will become vital for companies to track & measure the impact their distributed workforce has on their bottom line. Coworking space community managers are becoming corporate productivity officers. This role serves as part of the value proposition for coworking businesses, but also as a critical tool for companies when determining their operating costs.

When opening a new office, there is an overwhelming list of expenses to consider. These expenses go beyond the lease price for the physical square footage and are vital to track in order to drive costs down. Commercial real estate services firm Jones Lang LaSalle (JLL), has a simple rule that can be used to estimate the order of magnitude of real estate occupancy costs for an organization. Its called the 3/30/300 rule and is as important for coworking space owners to understand as it is to traditional commercial real estate facility managers.

The 3/30/300 Rule

The rule of thumb is to estimate, on a per square foot annual basis, a total cost to the organization of:

  • $3 for utilities,
  • $30 for rent, and
  • $300 for employees (salaries & benefits).

The 3/30/300 Rule is a particularly important tool for facilities managers when making decisions to help reduce costs for an organization. Traditionally, the focus has been on developing strategies to either lower utilities costs or to reduce the total lease price.

Energy efficiency is a great area to focus on to lower the cost of utilities & is relatively easy to implement. Replacing fluorescent or incandescent light bulbs with LEDs, installing a smart thermostat to regulate the temperature, and using natural light as much as possible can all result in lower utility bills. An energy efficiency initiative that reduces consumption by 10% will impact overall costs by $0.30 per square foot.

Another area of consideration is to reduced rent. To achieve a 10% savings in the lease price, that could mean negotiating the price for a longer term or moving to an area that already has lower rents. Lower rent might also come in the form of an older or less updated building, with less amenities both in the building and in the surrounding neighborhood. That 10% savings, however, equates to a $3 per square foot reduction in overhead.

So even if utility costs are significantly reduced, which is very difficult to achieve without significant investment, a 10% savings in the rental price overshadows the entire cost of utilities to begin with.

But what about the 300 column? Can changes in the workspace impact the cost of keeping employees in their seats?

The answer is a resounding yes, and is in fact where the greatest potential for organizational savings can come from.

Based on the 3/30/300 rule, 90% of the costs for an organization staff salaries & benefits. Anything that results in savings in this area can make a big impact on the balance sheet. A 10% difference, for example, is a $30 per square foot savings. That completely covers the cost of rent for that space.

For a facility manager, reducing costs in this category by having fewer employees or lower salaries is not only not within their purview, but is also not the best way to optimize the potential for savings. Instead, the best strategy is to take into effect how the workspace can increase employee productivity. According to a study published in IZA’s World of Labor, employees that are “happy” are 10-12% percent more productive in their jobs.

Measuring for Productivity

Productivity is not straightforward quantity to measure. It is dependent upon a lot of different interlinked variables, many of which are beyond what a space manager can control. However, there are good indicators and concrete strategies that have been shown to positively impact productivity in the workplace.

The World Green Business Council released a report in 2015 that divides productivity metrics into three areas: financial, perceptual, & physical.

Financial

Financial metrics for an organization include, among others, tracking changes in employee absenteeism & turnover, both of which can have a clear and drastic negative impact on progress on organizational productivity and costs.

Perceptual

Assessing perception can be accomplished by regularly surveying employees and correlating their responses with the more quantitative data in the financial and physical categories. Questions covering things like general comfort in the workspace, rating design elements, the layout of the space, or location and amenities, can all provide valuable insight into the impact of the office space on its occupants.

Physical

Taking direct measurements of the physical space, especially when correlated with responses about comfort, can play an objective role in determining what factors are contributing to or diminishing productivity in the workplace. The more measurements that can be taken easily and by a manager (or even someone using the space) the better. This could include indoor air temperatures, relative humidity, light levels, CO2 levels, and background noise. Additionally, tracking the levels of workstation density, numbers of private spaces versus social spaces, use of plants and greenery, etc. can all contribute to an in depth understanding of how the workspace is used to boost productivity, and how to improve it.

Community Managers as Productivity Officers

Coworking space operators & corporate facilities managers have a lot in common, especially as the modern workplace trends more to a distributed flexible model. For both, “How can we increase productivity for our users?” is a question that should be top of mind. For coworking spaces, an increase in the productivity of members is good for business. If members are getting a lot out of working from the space and are happier, the coworking business will likely see lower member churn, a more engaged community, and more referrals (and thus more members). And for the companies those members work for, the value generated by that additional productivity can be immense, even more so if it comes without the cost of maintaining a large corporate office.

By actively working to improve the office environment to optimize for productivity, community managers in flexible office environments can bring real value to their members and the companies they work for understanding & acting on what increases productivity. Good coffee & green plants are just the beginning.

Featured image for blog post Coworking value proposition part 2

The Coworking Value Proposition – Part 2 (Members)

/in , , , , , /by

In Part 1 of this Series on the Value Proposition of the Coworking Industry, I provided an overview of how an increase in the distributed workforce is driving change in the traditional office model. While many remote or distributed workers have depended on a home office or coffee shops to fulfill their workplace needs, these are not the ideal setting for a productive worklife. Coworking is the right solution, and the industry is just getting started.

Goldilocks & the Three Bears (St. Nicholas serial, 1873)

Over the course of the next four entries in the series, I’ll go through what the value proposition of coworking looks like for each major stakeholder in the industry: members, commercial real estate, employers, and communities. As the operator of a coworking space, these are the groups that are most important for me to consider when establishing and communicating the value of my business. For each of these groups, I’m going to ask & answer the same five questions with that group’s perspective in mind:

  1. What are the benefits of coworking?
  2. Why are these benefits valuable?
  3. What are their main problems?
  4. How does coworking solve these problems?
  5. Why is coworking the best solution to these problems?

As members are the lifeblood of coworking spaces, that is where I’d like to begin.  This is likely the group I’ve seen the most written about, but its also the most important and thus is very deserving of the attention.

What are the benefits of coworking for members of coworking spaces? 

Distributed workspace: Coworking spaces provide professional work environments away from a corporate office besides a home office, coffee shop, hotel lobby, or library. This includes good desks and supportive chairs, fast and consistent internet access, well designed work areas, private spaces for calls and client meetings, as well as coffee and snacks to keep you going throughout the day. (For more, check out the base level in Maslow’s Hierarchy of Needs for Coworking Members)

Flexible workspace: Coworking spaces offer flexible membership & lease terms that can vary from as short as hourly, daily, and monthly, to multi-year leases (*although with the new IPFS16 standards, leases 12-months and shorter are the most desirable –  need to write more on that in another post). The workspaces themselves are flexible as well. Most coworking spaces provide a range of casual café or lobby seating, open desk space, and private office suites.

Affordable workspace:  Particularly when compared to the overhead costs of renting and maintaining private commercial office space, coworking space memberships are extremely affordable. For the cost of one membership, the office space, utilities, meeting space, restrooms, kitchen amenities, and more are typically included.

Connected workspace: Coworking spaces have professional communities, other people around to provide human interactions, even if small.

Why are these benefits valuable? 

A full time job averages over 2,080 hours per year. That’s a lot of time, so there should be a high bar placed on what those workplaces offer to make that time pleasant and productive. And as more people are able to participate in remote work, the infrastructure to support that workforce needs to be where the workforce is – coworking spaces provide that infrastructure. For more on why I think the benefits of coworking are valuable, see “Maslow’s Hierarchy of Needs for Coworking Members”. What it comes down to is time is valuable, and the more productive those limited hours are, the more valuable they become.

What are the main problems being faced by customers?

Productivity. For those that can work remotely, there is still a need for somewhere to work and do so productively. For those that freelance, are on small teams, or work for themselves, there is still a need for somewhere to work and do so productively.

Work-Life Balance. Long commutes are detrimental to personal health and time, and to the environment. Costs of living are often too high near a corporate office to be able to move closer (think Silicon Valley/New York City) and moving is not always a good option when it takes a family away from their social support network.

How does coworking solve these problems?

In short, by providing flexibility & community, and everything else needed to achieve a high level of productivity.

By providing a professional work environment where it is needed, not where a person is told to be. Good internet access to ensure digital connectivity, nice office space for ergonomics and to support focused work, a community of other professionals to support human connection when desired. Locations distributed throughout communities, from downtown centers to rural towns. Varied workspace for focus, for collaborative space, for privacy, casual work, etc. Easy to access, flexible for when life changes.

Why is coworking the best solution to these problems?

Coworking spaces meet the professional needs of the distributed workforce, but they also help meet our personal needs by decreasing loneliness and increasing autonomy in how, where, and when to work. A recent FlexJobs Survey found that the reasons professionals say they would prefer to work from home rather than a corporate office included a decrease in distractions, a decrease in interruptions from colleagues, less stress from a long commute, and less office politics. While working from home can provide these benefits, there are even more downsides that cannot be ignored: home life distractions, isolation from peers, reduced work-life delineation, no professional meeting space for client meetings, etc. Coffee shops and other public spaces may remove the feelings of isolation to a degree, but only because of the presence of people. They lack the peer networking opportunities. Often they are too casual, can offer little to no privacy, may be noisy and thus distracting, and may not provide the level of stable internet connectivity and hours that are required for a truly productive work life.

Coworking spaces are the goldilocks solution for the distributed workforce. They are not the too-rigid corporate office or too-casual home office or coffee shop. They are just right.

Image for blog post Coworking value proposition part 1

The Coworking Value Proposition – Part 1

/in , , , , , /by

Between being a coworking space & building owner the past five years and being the co-founder of a software company focused upon supporting the operation of coworking spaces, I have spent a lot of time thinking about the industry. Not just my own space and its growth and performance, but how the industry fits into the overall evolution of the workplace and what its trajectory is going to be in the upcoming years.

Office typing pool | Missouri State Archives

The traditional corporate office is becoming antiquated and many corporations have already experimented with changing their operations to attract and retain employees – from adding perks like fancy chefs and on-site dental care to replacing the old cubicle with hip open office plans. Some of these experiments have worked better than others, but ultimately have not resulted in the increase in employee productivity and satisfaction that was desired. As digital tools have become more available, the movement from the corporate office to remote options has been gaining momentum. There is no denying that the future of work is distributed. Over 50% of employees across the globe are working part time remotely and that number is estimated to grow significantly in the next few years.

The need for a professional office environment for those workers, however, has not diminished as a result of movement. The coworking industry has not kept up with the need for distributed workspace. When a good solution is not available, we improvise and use what is accessible instead. An example of this is the number of remote workers that work-from-home or from coffee shops. There was first a rise in the number of employees working from home, taking advantage of telework policies. Then, as wifi became more accessible, many of those same employees filled tables at the corner coffee shop. The increase in the use of home offices and coffee shops was not a result of those being the best workplaces, but rather the only alternative options for so long. Likewise, commuting long hours to a main company office. People don’t commute because they will be most productive and happy at that office, they do so because there has not been a viable alternative.

That has begun to change, and it should. The demand for office space has become distributed.

The mission of the coworking industry is to drive the decentralization of the workplace that increases the productivity of the workforce. Coworking spaces provide a professional office environment wherever and whenever one is needed.

The value proposition of the coworking industry is a strong one. This is why there has been such a buzz around it in the past few years. While still a very young industry, it was already proven its not going anywhere. What exactly is the value proposition for coworking? In this series of posts, I’m going to explore that from the perspective of users of coworking spaces, commercial real estate owners, employers, and communities.

It’s not enough to articulate a value proposition for an entire industry, it is also important for the individual companies within the industry to articulate their own value, and then deliver on it. My hope is that not only will this series serve as a guide for my fellow coworking industry colleagues on how to craft compelling messaging to attract and retain members in their own spaces, but provide some perspective on the industry as a whole, whether you’re in the business or not.

Stay tuned or subscribe to this blog so you won’t miss the next entry!

  • Part 1: The Value Proposition of the Coworking Industry: An Overview
  • Part 2:  The Value Proposition of the Coworking Industry: Members
  • Part 3: The Value Proposition of the Coworking Industry: CRE
  • Part 4: The Value Proposition of the Coworking Industry: Employers
  • Part 5: The Value Proposition of the Coworking Industry: Communities
  • Part 6: Creating a Value Proposition for your Coworking Space
  • Part 7: Delivering on your Value Proposition
  • Part 8: Communicating your Value Proposition
Maslow's Hierarchy of Needs

Maslow’s Hierarchy of Needs for Coworking

/1 Comment/in /by

Coworking spaces pride themselves on offering a great workspace and communities of peers to work around. Building and maintaining a thriving coworking community requires an understanding of what members need in order to be productive.

What is it that members of coworking spaces need? At the most basic level, a place to get work done. Better than they could find at home, the local coffee shop, or their company headquarters.

Is that all they need? What is it that motivates someone to pay for a membership at a coworking space? Am I providing it? As the owner of a vibrant coworking space, this is a question that I return to on a daily basis. It drives every business decision I make. If I didn’t continuously evaluate this question, I would lose members and my revenue source. In the coworking industry, members are everything.

To explore this more deeply, I’ve turned to Maslow’s Hierarchy of Needs, a positive theory of human motivation first proposed by American psychologist Abraham Maslow in his foundational 1943 paper. The theory outlines both the basic needs of human beings as well as the order in which they need to be satisfied for a person.

Maslow’s Hierarchy of Needs, adapted for members of coworking spaces.

The needs, which I’ve adapted for members of coworking spaces, are categorized by Maslow as physiological needs, safety needs, needs for love & belonging, esteem needs, and self-fulfillment or self-actualization.

Basic needs

Physiological – Physiological needs are the most fundamental. They pertain largely to requirements for personal comfort. In a coworking space, this starts with the quality of the physical space itself. A coworking space must have nice desks and comfortable chairs that are conducive to working at a computer for long hours. There should be good lighting, comfortable temperatures, good air quality, and clean bathrooms. The environment should have minimal distractions to allow for focus and concentration. And coffee is a must. Lots of coffee.

Safety – First and foremost, safety and security for coworking members means trust. Trust that there will be reliable internet access so they can do their jobs and maintain their own personal financial stability. Trust in a safe building, through access control, security cameras, or well-established community rules and good staffing to assure members of their privacy and personal security while they are at work. And trust that their interests will be taken into account when changes are being made to the work environment.

Psychological needs

Belonging – As humans, we need love. Beyond our family and social circles, we need to feel a sense of belonging in our larger circles, including our professional ones. Professional relationships can combat feelings of isolation and loneliness. Sometimes, just being around people is helpful.

Esteem – Professionally, coworking members are seeking to be productive in their jobs or careers. They want to achieve their professional goals, and thereby receive respect and recognition for those accomplishments.

Self-fulfillment needs

Self-actualization – Self-actualization is narrowly defined by Maslow in the following way,  “This tendency might be phrased as the desire to become more and more what one is, to become everything that one is capable of becoming.”

A coworking space, or any business, that serves the higher and largely intangible needs of their customers will be rewarded with a more satisfied, more loyal customer base. And that translates directly to value for a business that is solely dependent upon its members.

As coworking space owners, we should follow this hierarchy consciously and deliberately. It is easy to focus upon the lower levels needs of our members. We spend lots of time and energy picking out the right paint colors, the location of our space, the layout, the furniture, or the artwork. There are building access solutions and policies to help with safety & security and great bandwidth is something I worked on before even picking up paint samples.

Meeting psychological needs is the reason many professionals choose to pay for a coworking space. The basic needs around physical space and safety can often be met at a home office, but friendship and professional relationships become more difficult when working for long hours in isolation. Coworking spaces offer a great way for freelancers and distributed workers to maintain positive professional social connections.

As Maslow wrote, “if all the needs are unsatisfied, and the organism is then dominated by the physiological needs, all other needs may become simply non-existent or be pushed into the background.”

The fastest way to lose members is not meeting their basic needs. 

It’s clear that a member that can’t find a private place for a phone call, experiences intermittent connectivity, or can’t stand the fluorescent lighting has a likelihood of canceling their membership. Less obvious is a member leaving as a result of their psychological needs not being met. A coworking space that is making adjustments only in the snack cupboard and is not putting enough effort into fostering potential interactions among members is missing a key component of member retention.

Determining where to focus efforts as a coworking manager and also discerning between what will impact a physiological need and a psychological one is hard. It can feel a bit like whack-a-mole tending to everything members ask for. That is, if you don’t have data to help you see what the needs actually are. Will your members talk to one another more if you offer a big after-hours event, or if you simply put out donuts & bagels one morning? If you are spending too much time tracking invoices and expenses, do you have the bandwidth to create a new customer pipeline for your unused meeting space? Do you know how often your meeting space is being used?

Having a complete picture of how your members are using the space is the only way to know how to meet their needs, from the most basic needs like lighting and furniture, all the way to helping them achieve self-fulfillment.

Achieving one’s full potential even partially as a result of where you work is where things get really interesting, and the research is clear – people that work from coworking spaces thrive. According to research conducted by a team of productivity researchers, members of coworking spaces see their work as meaningful, they feel in control of their job and their work, and they feel a sense of community.

Having a great workplace with a strong community, members have the bandwidth to focus upon their self-fulfillment. One of the largest factors that the researchers attributed the higher levels of productivity to was the autonomy enjoyed by workers in coworking spaces. When someone is able to bring their whole self to work and is not bogged down by unmet lower level needs, they are able to bring the best of their energy, their creativity, and problem solving skills to their work.

A coworking space that can help their members achieve this type of outcome is one that will enjoy high levels of member satisfaction, retention, and the best business outcomes.

Image for blog post the value of time

The value of time.

/in /by

As a physicist, I know a thing or two about time. I have spent countless amounts of it pondering its meaning, its measurement, and our relationship with it. I have lectured on how the gravitational pull of a black hole affects it and how it slows down if you are moving at close to the speed of light. So when I say that time is our most valuable asset, I mean it.

Image by Gerd Altmann from Pixabay

These days, although I may not be working to uncover secrets of the universe, I am still very much working on the importance of time. My focus now is on getting more leverage on my time so that I am spending more it of doing the things that are most important to me, both personally and professionally.

Personally, that meant doing things like moving to Lake Tahoe and away from the soul crushing traffic jams of Silicon Valley. When my oldest was a baby, there were way too many nights that my husband didn’t make it home from work before bedtime. Even my 5-mile commute could sometimes take an hour. Now, the time we used to spend in rush hour traffic is spent enjoying the trails and beaches of Tahoe with our daughters. We are both home to do things like work on homework with our oldest, actually cook a nice meal, and play with our toddler.

Professionally, its easy to never have enough time, particularly when it comes to running our coworking space. As a coworking space owner & manager, I have a bazillion different things that need to be done each day, and it is impossible to do a bazillion things well. There’s coffee to make, desks to be rented, tours to give, building maintenance to schedule, bathrooms to clean, dishes to put away, forks to buy (again), interns to manage, coffee to make (again), social media posts to write, events to plan, calendars to manage, expenses to track, community to build, and on and on.

I know I am not alone in my juggling act. It is one of the most common topics I see brought up by other coworking colleagues. It is all too easy to get bogged down in the tasks that keep us busy each day. The trap of being busy is a dangerous one. While it may feel like working hard, its not necessarily working well. Time at work should be focused on what is most important to make my business better, more profitable, and more resilient.

What is important for my business? Members, members, members.

Rather than spending hours buried in spreadsheets and databases, it is more important for me to be spending face-to-face time with my members. I love talking with them, learning what they like and need, and helping them so they can get the best leverage on their own time by working from my coworking space. The more time I have to spend actually with my customers, the better. Those interactions are what help inform decisions on space allocation in the building, on the events we host (or don’t), on additional product lines we offer, and what amenities we invest in.

In order to have enough time for the human part of the business, the busy parts need to be handled in a much more efficient and automated way. However, no matter how much time I personally spend with members, there is still only so much I can learn about their needs from the space or remember from the interactions I have with them.

This is why building Jellyswitch has been so important to me. What is needed is a balance between complete automation and manual management for coworking. Things like conference room calendars, billing, and building access don’t need the same human touch as space design, tours, or events, and can be operationalized. At the same time, it’s important not to lose the information and insight that can be gleaned from all of the little human interactions that happen day to day. Managing and tracking everything in one place rather than across multiple systems or not at all, I am able to see the full picture. And with that view, I can make the most of my most valuable asset for the benefit of my customers & my business. My time.

Image for blog post Working remote not equals working from home

Working Remote != Working from Home

/in /by

I’ve been seeing a lot of twitter threads, blog posts, and discussions online recently about working remote. Anecdotally at least, it feels like the frequency of these discussions is increasing. That increase may be related to the increase in the number of workers that are able to engage in part or full time remote work. In the US today, 43% of the workforce either is, or can, work remotely.

During many of these discussions there is a digression that makes me cringe. A conversation about remote work turns into a discussion of working from home and all the pros and cons that come with the ability to wear yoga pants until noon, sitting close to your refrigerator, your dog, your kids, etc. Then come the statements about why certain companies don’t allow working from home, why some do, how to better deck out a home office, and so on.

Here’s the thing – working remotely does not mean working from home. There are lots of other options in practice: coffee shops, business centers, libraries, and the best alternative, coworking spaces.

(left) How people think you work when you say you are a remote worker versus how you actually do (right)

The prolific rise of coworking spaces means that a remote worker can still have all the benefits of a professional workspace even if it is not their own company HQ. Coworking spaces provide a traditional office environment in a completely distributed way. A remote worker that belongs to a coworking space can have the same routine as their non-remote colleagues: getting ready in the morning, a commute of some length, a nice work environment, regular working hours, and human interaction (usually around the coffee maker).

When a neighborhood coworking space is available, working from a home office becomes an option and not a requirement to work remotely. Coworking spaces are popping up everywhere, with over 30,000 expected to exist worldwide by 2022 with more than 5 million members. They are no longer a passing fad limited to major cities. I’ve worked with spaces in every size community imaginable, my own space being in a town of only 25,000 people. I want the default assumption about a remote worker to be someone working from a coworking space.

Do you run a coworking space and want it to run even better? Or, are you thinking about opening a coworking space? Either way, let us know!

Image for blog post The incredible growth of coworking

The incredible growth of coworking

/in /by

Companies that don’t recognize this movement and leverage it are at a severe disadvantage. Imagine the ability to (inexpensively) hire engineers, designers, marketing managers, and more that don’t live and breathe the SF / NYC lifestyle. Video conferencing is ubiquitous, and working across time zones is now easy.

I work in a coworking space every day full of Bay Area refugees — this movement is real and easy to witness every day.

And, it turns out that working from home doesn’t cut it for the vast majority of this distributed workforce.

People want to interact with others. We want to have lunch with friendly, familiar faces. Sometimes it’s about bouncing ideas off one another, sometimes it’s about socializing, and sometimes it’s about building a network of like-minded individuals. It’s quite difficult to do so from home.

Unplugging from work when you’re at home is not easy when you work from home. Having a dedicated desk with your work in a different environment than where you live is a good thing.

One of the consequences of this new distributed work movement is the explosive growth in coworking. There are over 18,000 coworking spaces worldwide today, and an incredible 6,500 new spaces will open in the next 24 months. If you project just two more years out, there will be more coworking spaces in the world than Starbucks.

Coworking spaces offer a dedicated desk, a community of like-minded individuals to work and socialize with, fast internet, good coffee, and everything else you need from a productive office environment. Many of them are fun, exciting spaces that are a joy to work from.

If you’re a member of the distributed workforce, you owe it to yourself to find your local coworking space and give it a try. Odds are you’ll be happier and more productive.