Desks are not enough: Why Coworking Spaces must create Value for Startups

The popularity of coworking spaces is rising steadily. New shared office spaces are opening regularly and there is no doubt anymore, that the future of work will look different than today.

But looking from a startup founder perspective is an all-in desk really what we need? Are coworking spaces the best place for founders to spend the early days of their companies? By looking at the current state of the art, I suggest that startup founders avoid coworking spaces and this quick article will explain my position in closer detail. I also examine what coworking spaces must do differently in order to escape the deadly red-ocean of office space operators.

Coworking Spaces – My Background

I agree, criticizing coworking spaces is easy. Who am I to judge? Let me tell you my story of working in offices, from home, in coworking spaces, in Starbucks, and in the IKEA cafeteria.

My reasoning comes from multiple different angles. First as a startup founder. In 2017 my co-founder and I moved into our first office. It was a quite neat office of 30m2 in a mostly vacant large office building. The positive side-effect was the price: it was affordable. My productivity was at an all-time high as there were no distractions as there were only two joint tenants: two guys who worked on a 9-5 schedule.

As things fell into place, my co-founder left the company and I continued to work on my own on a TV channel for bars and cafés. The young co-working startup who operated the building began to show interest in a TV channel for their spaces. So I started to work together with the young coworking startup from Berlin in order to create a TV channel for coworking spaces. In the process, I talked to and visited dozens of coworking spaces and business centers in Germany to receive first-hand customer feedback. Today, I am also actively involved in an office center to actively escape the red ocean of office spaces.

So let’s start: here is my totally unbiased opinion on offices and coworking spaces as a guy who (1) worked in an office, (2) visited dozens of coworking spaces, (3) provided services to coworking spaces, (4) is actively involved in an evolving office space.

What is a Coworking Space?

WeWork Richmond Street, Toronto, Canada

First of all, let’s make clear what a coworking space and the idea behind it actually is. I think coworking can easily be defined as a situation where people work together in the same place, but not for the same company. A coworking space is, therefore, a place where individuals or organizations can rent single desks or entire offices. But again, a coworking space is not a coworking space.

The majority of coworking spaces are small boutiques with 5-30 desks. They exist because individual freelancers or small agencies rent out their surplus space in order to lower their rent expenses. The awesome side effect of these small spaces is that they actually attract like-minded individuals. As an example, you will find many tiny co-working spaces where only design freelancers work. These small places actually achieve what larger providers struggle with: they are a real community where people exchange ideas, collaborate, and even hand on jobs.

Then there is the coworking giant WeWork and its imitators. WeWork is the world’s most dominant office space operator with a valuation of $35 billion (July 2018). On their homepage, WeWork states that they “create environments that increase productivity, innovation, and collaboration”. Whether you are looking at their homepage or you book a personal tour through one of their locations, the focus is always on “Community”. They advertise with a WeWork app which over 210,000 members use – of course, each member offers you tremendous advice and many opportunities. At least that’s what WeWork is selling you. In reality, however, WeWork seems like an immense place with barely any community at all, especially when compared to small coworking boutiques.

Should you join a Coworking Space?

I strictly divide this into two groups: first, employees and freelancers, and second entrepreneurs and startups. For the first group it is absolutely fine to work in a coworking space, as long they get their work done. It’s a great place to socialize, get free drinks, and enjoy a harmonious work environment in some of the city’s best locations. Especially as a freelancer, coworking spaces offer a much-needed diversion to the lonely home office.

Now let’s talk about the second group: startup founders. Coworking spaces and shared offices are a startup’s worst enemy. They kill your productivity, your momentum, and eventually your team spirit. What should be your first and foremost priority in your startup? Establishing a great team while building a great product. I find apartments are the best place to hack and do deep work – there is no distraction, no time to commute, no outside influence impacting your startup and usually, they are a cheaper option. In coworking spaces, you will often find yourself distracted by other members, common events, and other bullshit which is not helping you to build a better product.

Paul Graham agrees by saying that “professional means doing good work, not elevators and glass walls. I’d advise most startups to avoid corporate space at first and just rent an apartment. You want to live at the office in a startup, so why not have a place designed to be lived in as your office?”

I’d argue that more often than not, co-working spaces act as an alibi for startup founders. Founders use co-working spaces to prove to their family or significant other (or whoever) that they are actually working on something worthwhile: “Look, mum, I’m actually working in a professional environment and I’m not sitting in a jogging suit in front of my MacBook in my 1 bedroom apartment!” This is absolutely a wrong motivation.

Co-working spaces and offices are also often a self-deception. By spending 10 hours in the office, you feel productive even though you weren’t. Co-working spaces kill your initial productivity which is – in my opinion – crucial for a startup to succeed.

Here is my point: all coworkers distract you from what you should actually do. Grabbing a coffee turns into a 75-minute conversation, Bob wants to show you his pitch deck, Alessia tells you about the new diners around the corner, the stupid community manager wants to connect you to a clueless investor. What the hell are you doing in this environment? So again, you just spent 10 hours in the office – but please be honest: WHAT DID YOU ACTUALLY ACHIEVE IN THESE 10 HOURS BESIDES CHATTING WITH STUPID IDIOTS ABOUT MEANINGLESS BULLSHIT? NOTHING.

Sorry for my rant but it is an important point for me as I experienced it at first hand. I think that apartments, garages, or seperate offices close to downtown are the ideal place to start a startup. It must be an environment where nobody can distract you and your team. This is super important to remain in your initial flow.

Jumping into the Blue Ocean

First of all, coworking spaces are nothing but a fancy distraction for startups. Secondly, there is not a lot of differentiation between coworking spaces. Whether you join WeWork or a local competitor to them will not make any difference. There is – or at least I don’t understand – the USP of coworking spaces. All they offer is a desk, a – supposedly – super great community, and free coffee (which is actually not free as you pay it monthly with your rent).

What can coworking and office spaces do differently in order to provide real value? Rethinking the business model is necessary in order to provide actual value. Everything you offer startups which enables them to offer better products, sell more products, and gain initial traction is added value. 90% of it will most likely result from a great infrastructure.

Let me give you a few examples: startups working on exponential technology will likely need access to tools and infrastructure they cannot afford. On the other hand, trade-oriented companies who try to enter global markets will appreciate an infrastructure which allows them to expand globally more easily.

Here is my advice for coworking space operators: decide who it is you want to serve, establish a narrow focus, and offer massive value to your new focus group.

Example 1: Coworking for Musicians

The Rattle in London has a narrow focus: it is a coworking space for artists and inventors in the music industry only. They offer their members exclusive coaching to develop your career as an artist. Isn’t exclusive access to a community of artists added value? And let’s not forget free music studio time. Artists and music entrepreneurs know exactly that The Rattle is the place to be for them – The Rattle has the right network, facilities, and people to help you succeed.

Example 2: 368 by Casey Neistat

368 is a new venture of the famous YouTuber Casey Neistat. With 368 he establishes an exclusive community for creators in New York City. Now he is buying the gear creators need and builds the equipment which is necessary for creators of the 21st century. Imagine having access to amenities you could otherwise never afford: professional recording studios, podcasting booths, and more.

Now you, as a coworking space manager, should find out which industry is most prominent in your city and how your ideal members look like. Let me give you a final template for exponential startups. There are startups working in many industries, for many of them an internet connection is not enough to do the job:

  • 3D Printing
  • Artificial Intelligence
  • Augmented Reality
  • Automation
  • Biotechnology
  • Blockchain
  • Brain-Computer Interface
  • Genetics
  • Internet of Things
  • Nanotechnology
  • Stem Cells
  • Virtual Reality

Decide on one or multiple industries which go together and find out what they need to succeed. Focus on the few not the many. Don’t be sad that many of your current members will leave, instead offer massive value to your new focus group and you will become an expert and leader in your chosen industry. An office space offering the necessary amenities, tools, knowledge, and network without asking for equity is a place I’d seriously consider joining as a startup.

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