The two sides of office sharing

I stopped by the Hub LA recently to check out what happens when you attempt to create a community work space stocked with entrepreneurs interested in bringing about a positive social or environmental impact.

Founded in London in 2005, there are now over 30 Hubs in cities ranging from Johannesburg to San Francisco which all share a broad goal of creating work spaces that can both incubate young businesses while creating community and encouraging collaboration. Like all Hubs, the Hub LA has a focus on “taking action for a better world,” and includes members working on startups in renewable energy financing and green buildings.

A community membership model

In talking to Hub LA co-founder Elizabeth Stewart, it was evident how membership focused the model is. Stewart actually dislikes the term co-working to describe what the Hub LA does precisely because she doesn’t want to create a space that’s merely desks and wifi.

Rather, she has poured much of the Hub LA’s efforts into building out programming, ranging from office hours with lawyers to workshops with VCs on raising capital to meditation and yoga classes. Perhaps as important has been engaging with members to figure out what kind of programming they want as well as how members can help one another.

“People are actually getting the resources and relationships they need,” said Stewart. “There’s a real give-get. It’s not just extractive in nature.” Stewart’s staff also does business development for members including highlighting Hub LA entrepreneurs and getting them access to events and connecting them with investor networks.

 

The Hub LA.

The Hub LA.

 

The philosophy is also evident in pricing. Membership models for work spaces typically don’t favor a la carte pricing where workers can drop in and pay by the day or hour for space because it can encourage workplace transiency which isn’t conducive to community building. At the Hub LA, members choose between monthly packages of hours with an unlimited option. Launched last fall, the Hub LA now has 175 members and Stewart believes she’s on track to reach her goal of 600 members.

Transaction based office sharing

On the other end of the remote work trend are startups like LiquidSpace, which is pursuing a largely transaction based business model geared toward providing the broadest access to available workspace for professionals. The company is fairly engaged in going after the corporate side of business, giving companies the ability to provide mobile and remote work options for their employees.

The corporate angle is critical here because corporations can view co-working space as another service they can offer their employees as they travel or even if they just want a space a bit closer to home. While corporations often have deeper pockets, getting freelancers or entrepreneurs to make a daily decision to purchase co-working space is a tough sell for workers with less cash. In the whole a la carte versus membership debate, I often recall Netflix and believe part of its success revolves around users not having to make a transaction decision every time they watch a movie. The same principle can impact co-working.

The outlook of a company like LiquidSpace, which is focused on developing an extensive platform to connect space with workers, is evident in how the founders view the value of the physical space itself and what they’re providing.

LiquidSpace President Doug Marinaro told me last November that “similar to the consumerization of IT, we see this as the consumerization of real estate. For LiquidSpace the opportunity is in finding a way to put consumers in control of office space.”

There are macro trends behind this viewpoint, which LiquidSpace co-founder Mark Gilbreath outlined for me. For starters, there’s significant oversupply in the commercial real estate market. And over the past 20 years the average square feet allocated to an employee has gone from 250 square feet to 150 square feet.

“You’ve got 3.5 billion square feet of excess capacity,” said Gilbreath. “That’s 20 years of inventory. We have a staggering amount of excess supply and therein is an opportunity to put that existing inventory to work in ways and formats that are more consistent with how people work today.” LiquidSpace has raised over 10 million in VC from investors including LinkedIn co-founder Reid Hoffman.

Life after Loosecubes

Finding the right business model for office sharing remains an issue. Loosecubes’s abrupt shutdown last November was a reminder of how tricky finding the right revenue scheme can be. Loosecubes initially went after an a la carte transaction based model built around an online platform but pivoted toward a membership model where by being in the LooseCubes network, members could work at the offices of companies that were part of the network. The idea was to generate value for both hosts and renters by bringing together like minded workers, like a freelance graphic artist spending a few days at a web design firm.

While getting companies to open up their office space to outsiders always seemed to have some challenges, I remain convinced that Loosecubes’s other strategy, of leveraging social networks like LinkedIn to try and connect those online connections in a physical workspace, will eventually materialize. There’s intrinsic value in having those business relationships exist in the physical world. In fact, one of the complaints I hear most about LinkedIn is that it has limited value for members and does little to help people build new business relationships.

Because as different models arise, attempting to either provide flexible work space or a networked community of socially responsible workers, it will always come down to providing value to those workers.