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Press on: let’s focus on customers, not WeWork.

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For the past few months, WeWork has dominated the coworking world: newsletters, list serves, articles, opinions, commentary about their valuation, the shelved IPO, and now the news about SoftBank taking over.

The noise around WeWork has been drowning out the rest of the coworking industry for years. Of the top 20 stories in my inbox from a leading industry website, every single link was a story about WeWork. WeWork made coworking and flexible workspaces a nearly household phrase. Now it’s time to press on and take advantage of their momentum.

What’s completely absent from this conversation? Customers. It’s imperative that we stay focused on what matters – our members.

Let’s stop talking about WeWork and turn the conversation back to our customers. I want to read articles about how we all listened to our members and delivered an incredible experience to them. I want to read about how our businesses are thriving!

We all know that proactively gathering feedback from our customers is the quickest, most effective way to rapidly improve our business. Here are some key questions that every coworking space operator should be asking their members, and regularly.

If you were us, what would you do differently?

It is not enough to setup a few Instagram worthy desks or put a happy hour on the events calendar. If your members predominantly have children at home, it is possible that after hours events are never going to appeal to them, or be attainable for them. Perhaps your members would really like a toaster oven in the kitchen, or they would invest in more standing desks.

If you don’t provide your members the opportunity to help you improve, they might not be your members for much longer.

How do you use the space?

How someone physically interacts with a coworking space can be very revealing in terms of their satisfaction. Do they have a favorite armchair in the common space? Do they spend most of their time at a dedicated desk, but feel comfortable shifting to a couch in the lounge for a change of scenery? Are they not coming in as much as they thought they would because they actually don’t have what they are looking for?

As the numbers and types of people that are able to take advantage of flexible workspace grows, so will the need for additional flexibility in the physical space that is available to them. It’s important to know how your members use and would like to use the space so you can design it well.

What is it about us that makes you stay?

For many communities, there are multiple coworking spaces & flexible workspaces to choose from. Additionally, working from home, a coffee shop, or another more casual setting is always an option. So what is it about your product that is keeping your members around? What value are you providing to your members? Find out, and double down.

Along these lines is another great question:

What would you do if we shut down?

What do we do that you love and that you share with your friends?

Every company needs its advocates. Word of mouth marketing is one of the most powerful ways to grow a company. Consumers widely trust recommendations from friends & family over any other form of advertising. What are your members saying about you to their friends?

You need to understand how to best engage your most powerful influencer base. If a member loves something about working from your space, you can help them articulate why they love it so they can better discuss it with friends. Provide them with ways to further engage by creating social media content that aligns with what they love, so they can share it more quickly. If it is something that your current customers love, your future customers likely will too.

What are your challenges? How can we help?

This may be purely professional in nature, but could also pertain to a member’s personal life to some degree. And that’s okay. A strength of coworking is the communities that develop within each space.

Professionally – are they working towards a promotion? Do they have a big project underway that means they need a quieter space to focus? Is their startup trying to fundraise? Would they benefit from a warm introduction to someone else in the space?

Personally – are they new to town and need help finding their new favorite restaurants? Would they like more opportunities to network to make more friends? Do they need a babysitter/contractor/CPA recommendation?

Talking to customers and learning from their answers to questions like these is the most important tool for building an amazing product.

The only thing that matters in the coworking industry is its members. Let’s focus on them.

The lobby of Cowork Tahoe in South Lake Tahoe, California

Coworking & the 3/30/300 Rule of Thumb

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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)

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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.

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The Coworking Value Proposition – Part 1

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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