Additional thoughts on Coworking Space in NYC

As you know, a few of us (led by Tony) have been working hard to close on a space in NYC for coworking - and we have enjoyed some incredibly positive responses in the last two weeks that have helped us craft a working proposition for New Work City (things to come). In this search, a number of hard lessons have come to pass that I think should be considered in terms of facts and figures:

• Back in April of 2007, Darren Herman announced his desire to make a similar thing to our dream, and 45 days later realized the challenges that accompany this task and decided to pass on the idea.

  In a separate conversation, Darren shared with me his challenges - especially the need to have a tight management on costs and a strong operational group to ensure delivery of the service and space.

  But on top of it all, the challenge of running a space like his (and very similar to NWC) is a near-total dedication of core people to deliver 24/7/365. This is not a startup or a restaurant or some company that you might be able to turn off for the holidays - this is a social good, a service that often requires non-stop attention to the needs of the community.

  Darren has been a terrific source of information and has helped us move forward through some interesting challenges.

• Recently, NYSIA closed its incubator amid difficulties getting continued of government funding to run the space.

  In talks with Angelina Jao, there were many lessons that were captured in the efforts to build the Incubator - instructively, events that brought community members together into a common space.

  I believe some of the challenges NYSIA had had to do with the cost of the space (55 Broad is a Class A building with excellent services) and a very high square-foot cost structure (services layered on top of the basic real-estate cost).

  But, as we learned, another challenge was that NYSIA was more in line with a full-service office space, not necessarily a community space - like the one Darren was creating and NWC has our eyes on.

• Over a week ago, I attended the NY-Israel Tech Meetup at Blank-Rome (organized by Yaron Samid from Pando) where I luckily met Cheni Yerushalmi, one of the founders of Sunshine Suites.

  Instead of being competitive about his offering or threatened by our vision, Cheni has been incredibly forthcoming and we have had a couple of meetings where we have discussed his vision and our vision of NWC and the challenges faced.Cheni brought home (for me in particular) the importance of understanding the challenges that exist in this cost structure and the need for slavish dedication to operational costs and services for an enterprise like Sunshine.

  And while I may not share in Cheni’s aesthetic style for some of the common areas, he has had six years of on-the-job training which has brought to light a number of constraints that are not often thought of when an endeavor like coworking is undertaken and desires to expand. While I may not personally like the Suite structure that Cheni has built, I do see the benefit and vision that he has and completely recommend it for people who connect with it.

• We also met with John McGann from Nutopia and discussed a number of the lessons he has learned from building from his original vision back in the late 90s.

  John has been incredibly generous with his insights and thoughts and helped us flesh out the finances for the space and given us a real-life point of view of the associated costs and concerns that await any space such as this.

  My personal favorite kernel of truth came from a simple analogy he presented us - how people tend to work. His model was in terms of how people tend to study is essentially how people tend to work - they either:

  • study by themselves - in their dorm room, in a cubicle or their research office
  • study in a controlled community environment - quiet library or study room
  • study in a more dynamic community environment - coffee shop or external study hall

  When looking at the options in the marketspace, there are lots of the first (MicroOffice, TechSpace, Sunshine Suites), a couple of the second (paragraphNY) and a perceived availability of the latter (Starbucks, coffee shops in general).

  But Nutopia, Darren’s vision and NWC are sorely missing in the marketspace which is more closely aligned as a mixing of the three.

• David Rose is launching a space at Rose Tech Ventures for $700 a desk (outside of SparkSpace incubator, IMHU), which is with the intent of cultivating serious entrepreneurs in a space where others can share.

  In David’s situation, he has a direct benefit to the space - access to entrepreneurs who can cross-pollinate and a built-in marketing savings by having a group of NY Tech Ventures providing word-of-mouth marketing and foot traffic for potential deal flow for David and Rose Tech Ventures.

All of this reporting is meant to give you an insight into our efforts on moving forward with NWC and sharing with you - our community. Tony spends about half of his days working on this effort, with the intent of making it happen. We have been investigating options that help reduce our risk and merge our vision with symbiotic offerings as well.

At present, we have at least two organizations that are talking with us about a co-sharing of a community space, and one organization has expressed interest in sponsoring a “incubator”-like space if we can offer solid details on how and why.

We have challenges that we believe we can overcome. For example:

• Up-front Costs & Managing Risk
  To sign a lease on a space requires three months’ rent, which reaches nearly $30,000. On top of that, we’ll need to move into the space and have enough cash to keep us afloat until we break even. Amassing the necessary cash requires either a strong grassroots effort, or the help of a benefactor who has an interest in seeing the space get off the ground (Mayor Bloomberg - got a couple of dimes to spare?).
• Staffing
  The space must run efficiently to be a sustainable business, and that means members must play an active role. At Independents Hall, the full-time members manage the space. We will need the same kind of participation.

Our desire has been much like Darren articulated:

..to create an early stage inspiration space for entrepreneurs to come and conceptualize and incubate their ideas. This is not the type of space you’d run your ad-sales team out of or code 24/7 with your entire coding team, but rather a bright space that inspires creativity and the place where you can begin writing your business plan, work on selecting co-founders, talk about raising capital, meet your next lawyer/accountant, etc. [The] ultimate goal is to create an entrepreneurial network for digital media and technology and have multiple spaces around the world so that people can use them in whichever major city they were traveling to.

We are working to create this - and we are working with people from many of the spaces - and still have some hurdles to jump. We welcome your insights and your involvement - especially with our upcoming meeting on the 15th. Please be sure to join us.