The Work-life Insight

Employee engagement is critical to the sustainability of your company. You can define it by the extent to which employees commit to someone or something in their organization, how hard they work, and how long they stay as a result of that commitment. Employee engagement lends itself to better customer engagement, sales and profits. Ultimately, employee engagement boosts the bottom line.

A 2018 Dale Carnegie study on employee engagement identified three types of employees: engaged, unengaged, and actively disengaged. Engaged employees drive company initiatives and move the organization forward. I call these individuals “influencers.”

The second group, the unengaged employees, do the minimal work to keep their job. They’re not bad; they just exist. I often call these people “retiring in place.” This group may be the most pivotal, since your goal should be to help these people move to the first group.

The final group, which is the most difficult and the most toxic to your current culture, are the actively disengaged employees. They have negative attitudes, they can be disruptive and their negative energy affects those around them.

Just because an employee has been with your organization for many years doesn’t mean he or she is continuing to add value. Think about the employees whom you consider the backbone of your company. These employees are highly committed, dedicated and motivated. Your goal should be to create a culture that encourages employees to stay and engage, which feeds into what I call team synergy.

Your goal should be to create a culture that encourages employees to stay and engage.

Start by asking what your company values. Your mission statement should provide a guideline for the behavioral style, work ethic and priorities you desire in your employees. This understanding helps facilitate interviews, so that you’re hiring people who buy into your culture. It’s also important to incorporate these values into the daily lives of your employees, so you can retain engaged employees who believe in these values.

With respect to organizational structure, researchers and practitioners have identified six elements that lead to an engaging team environment:

• You need a clear vision for your desired outcomes as a team.
• The vision must be filtered down to all levels of the organization and operationalized.
• You need ongoing training and a learning environment.
• You need decision-making authority within the team.
• You need team-based rewards and evaluations, or what I call “process goals.” If you have a big goal for your team, break it down into small, manageable steps, and establish rewards along the way. That approach encourages positive behavior change and keeps people motivated. (As an analogy, if you set a goal to lose 50 pounds, but the only time you received reinforcement was when you lost the entire 50 pounds, your goal would be pretty daunting.)
• Lastly, you need a culture that’s open to various ideas and perspectives.

What constitutes a great team? Here are six elements that I’ve found differentiate great teams:

• Aligned values: What motivates the individuals must align with the team’s goals and motivations. When considering your organization’s core values, also consider how they translate into behavior.
• Trust: Team members must know they can count on each other to get the job done correctly and that as a challenge crops up, they will have each other’s backs.
• Respect: Individuals need self-respect for their own ability to contribute as well as respect for other team members’ abilities.
• Communication skills and the format to communicate
  effectively: A strong leader will facilitate those conversations.
• Passion: A great team is made up of committed people who believe in what they’re doing and whose goals align
• Soft skills: Technical – and technological – expertise is a necessary but insufficient ingredient for leadership that cultivates great teams and employee engagement.

The process of evaluating your company’s culture requires assessment of employees and determining the factors influencing employee engagement. Ask yourself what changes you can make to motivate and reenergize those employees who have a history of being productive members of your team but are no longer engaged. These investments in human capital provide a huge ROI because they create loyalty in your employees and thus in your customers. Investing in your employees and creating employee engagement is essential to your bottom line.

Investing in your employees and creating employee engagement is essential to your bottom line.

Credit:
Post Author: Denise Federer, Ph.D.
Website: https://trainingindustry.com/blog/

As a business coach for millennial entrepreneurs, I regularly encounter young creatives who feel defeated, burnt out and frustrated with their work. And honestly, I can’t blame them. With today’s competitive advertising platforms, algorithmic inconsistencies on social media and an overload in content creation, it’s harder than ever to stand out and scale an online business with confidence.

That’s why I asked four seven-figure millennial entrepreneurs to share their best insights on how they continue to grow and reach new milestones in their businesses against all odds. Use this advice to gain clarity, inspire action and think outside of the box to manifest massive change.

1. Invest in the right team members.

A common theme I see amongst young successful entrepreneurs is their ability to choose business partners and team members with strengths that can be leveraged for success.

“The reason that my business reached a million dollars in revenue within three months of launching was because I had a strong business partner with essential skills that I lacked,” says Irina Wynn, CEO and founder of World Microblading and Fab Life Society. “He excelled at paid media and business development, so having him on my team allowed me to focus on the creative and branding aspects so much more. The truth was that I already had an offer people needed, but my business partner helped position me as the go-to choice in my niche through ads and essentially become the Category King,” Wynn says.

Ultimately, it’s impossible to grow if you’re capped out on your time, your energy and your resources, so having the bravery to step out of your comfort zone and bring others into your vision is often the key you need to experience a major breakthrough.

2. Stop overcomplicating your success.

While building the necessary skill sets to scale your business is often a steep learning curve, nothing is more challenging than rewiring your mindset for success. But if you’re able to make certain mental shifts and continually strengthen that muscle, you’ll see that the only thing standing in your way is your own self-doubt.

Jeremy Adams, the co-founder of Prestige Food Trucks and CEO of Unicorn Innovations, credits his multimillion-dollar ventures to his simple belief that he could do it. “What most people don’t realize is how simple it can be to reach seven figures. You can sell 100 $10,000 items to get to a million, or 10 $100,000 items to get to a million. I simply chose to enter an industry where the average customer pays $1 million per year. It started with believing that I could and not overcomplicating it.”

3. Always evaluate the quality of your product.

Shaan Patel, the CEO and founder of a Mark Cuban-funded company, PrepExpert, says that your business will never grow if your product isn’t essential to helping others.

“There are three key elements attributed to hitting seven figures: 1) Product, 2) Product, 3) Product,” he says. “Focus on creating the best possible product or service for your customer. The better the user experience that a person has with your product, the more likely they will tell a friend or colleague about it. Word of mouth is worth 10x more than any paid marketing you can do for your product or service. In fact, for the first five years of my business, I didn’t do any marketing for Prep Expert. Yet, the company still doubled revenue every year. Why? Because the SAT and ACT classes are so good that students would tell their friends about the score improvements, college admissions and scholarships they got! Word of mouth is key to building any seven-figure business. By building a better product, you are building the marketing directly into the product.”

4. Leverage the power of your local community.

If you’re stuck in a sales rut, one of the best things to do is to look outside of the box, reconnect with your brand values and create new ways for your ideal customers to pay you.

That’s how Johnathan Grzybowski, co-founder of digital marketing agency, Penji, was about to hit seven figures in his business. “Back in November of 2017, we were having trouble enrolling new customers. Being a community conscious startup, we’re always seeking new ways to support our local community, so we came up with an idea,” he says. “We decided to create a new offer that serviced qualified local nonprofits for only $1 per month. The program gained local notoriety and shortly after, top influencers and leaders within our local network championed us by introducing their friends and business colleagues to our business. Most of our sales within our first year came directly from positive praises that stemmed from us giving our service away for free to nonprofits.”

As you can see, reaching accelerated results in your business is often so much simpler than you think—all it requires is for you to step out of your comfort zone, leverage the right teammates to lift you up, strengthen your mindset and dare to do the (seemingly) impossible. You’ve got this.

Credit:
Post Author: Lena Elkins
Website: www.success.com

A two-person startup just closed a $180,000 annual contract with a Fortune 500 procurement team. They didn't have a corner office. They didn't have a receptionist or a mahogany boardroom table. What they had was a professionally equipped conference room, booked for two hours at $65 an hour, in a purpose-built coworking facility in Jersey City. The total cost of looking like a company ten times their size? $130. The return on that investment? Roughly 1,385 times what they spent. This isn't a hypothetical. It's the kind of math that startups and freelancers are running every week as on-demand conference rooms become a critical tool for closing bigger deals. The old playbook said you needed a permanent office to be taken seriously. That playbook is dead. What replaced it is a smarter, more intentional approach: rent the room when the meeting matters, skip the overhead when it doesn't, and let the quality of your space speak before you even open your mouth.

The Psychology of Space: Why Professional Settings Close Deals

Before a single word is exchanged in a meeting, your environment has already made an argument for or against you. Research from the University of Exeter found that well-designed workspaces can increase productivity by up to 32%, but the psychological effect on clients is just as powerful. People make snap judgments about competence, reliability, and financial stability based on where they're sitting. A polished conference room with proper acoustic treatment, clean sightlines, and professional-grade AV equipment sends a message: this person is serious.

Establishing Instant Authority and Credibility

There's a concept in behavioral psychology called "priming," where environmental cues shape how people interpret subsequent information. Walking into a professional conference suite primes your client to view your pitch through a lens of competence. The room itself becomes part of your sales toolkit.

This is especially true for freelancers and small teams who lack the brand recognition of larger competitors. When a prospective client visits a well-appointed meeting room with a staffed reception area, complimentary refreshments, and a business address in a respected commercial district, the perceived gap between you and a 200-person agency shrinks dramatically. You're not faking it. You're being intentional about the impression you create, and that intentionality is exactly what clients are evaluating.

The ROI of a $65 Conference Room

Traditional Office Costs (Annual)

• Lease: $54,000–$102,000
• Total with expenses: $70,000–$130,000

On-Demand Model

• 2 meetings/week × 2 hours × $65
• Annual cost: ~$13,520

Savings

• $56,000–$116,000 per year

Often, one meeting pays for an entire year of room bookings.

Technical Advantages That Actually Matter

1. Enterprise-Grade Internet

• High-speed (often 1 Gbps)
• Low latency
• Stable connections

Critical for:

• SaaS demos
• Video calls
• File sharing
• VPN access

2. Security Standards

• Encrypted networks (WPA3)
• Isolated connections
• Professional infrastructure

Why it matters: Enterprise clients evaluate security - even in meetings.

3. Advanced AV Setup

• 4K displays (75”+)
• Wireless screen sharing
• PTZ cameras
• Professional audio systems

Impact:

• Clear communication
• Better hybrid meetings
• Stronger presentations

Leveraging On-Site Support and Amenities

The details that seem small often carry outsized weight. A staffed reception area that greets your client by name, offers them water or coffee, and directs them to the correct room creates an experience that feels polished and considered. These touches are standard at quality coworking facilities but impossible to replicate at a coffee shop or hotel lobby.

Catering options also matter more than most people realize. Providing a spread of lean proteins, whole grains, and fresh fruit during a lunch meeting keeps energy levels stable and signals thoughtfulness. Compare that to the standard hotel catering tray of cookies, pastries, and soda that triggers an energy crash thirty minutes into your pitch. The food you serve is part of the message you're sending.

On-site technical support is another differentiator. When your HDMI adapter fails or your video call drops, having a staff member who can troubleshoot in real time prevents the kind of awkward technical fumbling that kills momentum in a presentation.

Maintaining a Professional Image for Distributed Teams

Remote and hybrid teams face a unique challenge: they need to come together physically for certain high-stakes interactions, but they don't need a permanent office to do it. On-demand rooms solve this precisely. A distributed startup with team members in three states can book a central meeting location for quarterly planning sessions, client presentations, or investor meetings without maintaining space that sits empty 90% of the year.

The consistency of the experience matters here. When your distributed team always meets in well-equipped, professional environments, clients and partners never question whether you're a "real" company. The physical space validates your digital presence, and the hourly cost is a fraction of what you'd spend on permanent real estate.

Making the Space Work for Your Next Big Opportunity

The shift toward on-demand professional spaces isn't a trend. It's a structural change in how small businesses and independent professionals compete for high-value work. Starting from just $65 an hour, freelancers and startups can access the same caliber of meeting environment that Fortune 500 companies use, without the six-figure lease, the furniture procurement, or the IT infrastructure buildout. The room becomes a strategic asset rather than a fixed cost, deployed precisely when and where it creates the most value.

If you're ready to stop meeting clients in spaces that undermine your pitch, consider what a purpose-built professional environment could do for your close rate. WorkSocial, located in Jersey City with easy PATH access to Manhattan, offers exactly this kind of on-demand meeting and coworking space designed for professionals who want to make a strong impression without long-term commitments. Explore your options here and see how the right room can change the trajectory of your next deal.

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WorkSocial: Airbnb office space and workspaces

From offering desks to private offices and meeting rooms, our world class workspaces have the perfect accommodations for your organization. At WorkSocial you have all you need to run a business. Our Airbnb office space solution will fulfil all your workspace needs with the plan flexibility and pricing that’s to your liking. Talk to our team now to select the best office that perfectly suits you and your team!

Airbnb Workspace For All Team Sizes

The innovation behind airbnb business solutions spaces makes workspace resources available to all types of companies. Whether you’re running a startup or leading an executive team, WorkSocial has a space designed for you. Every company at any status can benefit from WorkSocial in the northeast metropolitan area. Stick to your budget while taking your business to the next level in a shared airbnb for workspace that inspires and motivates your team. WorkSocial is the right place to give your ideas shape and mold it into a thriving company. Save the costs of overhead and traditional office costs while renting the perfect office for your team.

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Private Office Space

Private office spaces for rent at WorkSocial provide the luxury of a more focused work experience with opportunities to socialize at your will. Have a space of your own at a reasonable cost. Perform your daily tasks peacefully and comfortably without distractions and interruptions. Imagine a lock-key office with a city view, personal phone, privacy panel and more for a productive work day! All this is available at WorkSocial airbnb for office space as we support your business needs in open and private workspaces.

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Airbnb for Workspace Solution

Coworking spaces are a unique experience that present opportunities for people of diverse backgrounds to unite and pursue their dreams. Also, our airbnb work spaces offers board rooms, conference rooms, training rooms, meeting rooms, shared offices, single desk rooms, interview rooms and presentation rooms. With our top-notch professional services, you can rent coworking spaces for any career purpose. It can be for employee gathering, off-site meetings, training, and even consultations. Get in touch with WorkSocial- we’re in Jersey City and New York City! Start to save and connect more by renting coworking spaces.

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Airbnb for office space

We have everything you require to run your company efficiently.

Sweating the small stuff is what we do. Keep focused on growing your business and enjoy the financial and social benefits of a shared airbnb office rental through coworking! Office essentials and WorkSocial perks are at your beck and call to confidently show up for your airbnb business space. Come visit us today and see why you should take that next step in your career with WorkSocial.

Airbnb FAQs

Why Must You Choose WorkSocial Airbnb Coworking Solutions?

The new age business requires structured solutions. The competitive nature of business requires you to have spacious rooms, the latest technologies, and effective communication to take the lead in every aspect of a business. Airbnb for office space gives you the means, tools, and resources to make your business name known amongst the market leaders. WorkSocial allows you to be a part of an inspiring community and grow your business through collaborative efforts. We are the only partner you need to solve your workspace problems regardless of the size of your team or business. Keep your terms flexible within the set budget. We are customizing your business at every step!

Does WorkSocial Airbnb for Office Space Offer Amenities?

Yes, WorkSocial has enterprise-grade amenities to ensure stress-free management of the business. Your brand needs a dedicated Airbnb for workspace to work comfortably without distractions. We have included world-class amenities to increase your productivity and efficiency. WorkSocial has premium services for sorting, managing, and taking your business to new heights. Work smarter and harder as we have facilities like:

• Free High Speed
• Wi-Fi
• Complimentary Drinks and Snacks
• Free Printing, Scanning & Copying
• Mail Services
• Presentation Equipment
• Staffed Reception Area
• Video Conferencing
• Breakout Rooms
• Onsite Notary Public
• IT Support
• Conference Spaces
• Business Lounge

We can also make special arrangements for your business. Call us at +1 201-210-8255 to discuss your special requirements!

Does WorkSocial Airbnb Work Spaces have Different Membership Options? 

You can avail of multiple membership options from us. Monthly Memberships and Yearly Memberships are the most-in-demand options. We further allow our clients to rent workspaces by the hour, daily, weekly, and other tailored options. WorkSocial has curated services keeping all the basic and advanced requirements a business usually prefers. The remote working options have increased the demand for Airbnb office space. We want to keep up with all business types!

How Can You Book a WorkSocial Airbnb Office Space? 

We intend to make the booking process easy for everyone. Visit our site, select your option of Airbnb workspaces and book it online. Still cannot figure it out? Our professional customer executive will assist you over a call or book it for you. Once completed, you will receive an official confirmation from team WorkSocial. Dial in at +1 201-210-8255 or email us at [email protected].

What Other Facilities Does Our Centre Provide with An Airbnb for Workspace? 

Our services go beyond the business essentials. You need an organized space to conduct all your meetings, conferences, team meet-ups, and other get-together sessions in full confidentiality. We have strategically designed the layout to form a professional brand image throughout international boundaries. WorkSocial has ergonomic Airbnb meeting rooms and conference rooms, innovative video conferencing solutions, business lounges, break areas, and multiple facilities. Here are the other benefits you will get in our centers:

• 24×7 expert office support team providing prompt solutions
• A reputed business address to add value to your business. The prime location will make an impressive first impression. Display it on your business cards, letterheads, and promotional materials
• Access to common areas, including cafeterias
• Cutting-edge IT and Telecommunications infrastructure for modern business operations
• Fully furnished rooms

Will You Get Administration Support from WorkSocial? 

You can book WorkSocial Airbnb for conference rooms or daily official work; we provide 24×7 onsite support to everyone availing our services. The center has live receptionists to welcome your guests. If you need to print, laminate, make copies of documents, or do any other administrative task, our business support will get it done for you. We want you to focus on the bigger picture of your brand’s future while we take care of the rest. WorkSocial feels it is our responsibility to represent you in every way when you are busy.

Some of the most potent innovation taking place today does not involve breakthrough technologies… but rather the creation of fundamentally new business models.

For most of history, these models were remarkably stable, dominated by a few key ideas, upgraded by a few major variations on these themes.

In the 1920s, it was the “bait and hook” model, where customers are lured in with a low-cost initial product (the bait: a free razor) and then forced to buy endless refills (the hook: blade refills).

In the 1950s, it was the “franchise model” pioneered by McDonald’s. Or take the 1960s, where we got “hypermarkets” like Walmart.

But with the internet’s arrival in the 1990s, business model reinvention entered a period of radical growth.

In less than two decades, we’ve seen network effects birth new platforms in record time, Bitcoin and blockchain undercut existing “trusted third party” financial models, and crowdfunding upend the traditional ways capital is raised.

We are now seeing 7 emerging models slated to redefine business over the next few decades.

And today, while countless businesses are anchored by a mentality of maintaining—competing solely on operational execution—it is more vital than ever to leverage these business models for success in the 2020s.

Each is a revolutionary new way of creating value—each is a force for acceleration.

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The Crowd Economy

Crowdsourcing, crowdfunding, leveraged assets, and staff-on-demand—essentially, all the developments that leverage the billions of people already online and the billions coming online.

All have revolutionized the way we do business. Just consider leveraged assets, like Uber’s vehicles and Airbnb office space , which have allowed companies to scale at speed. These crowd economy models also lean on staff-on-demand, which provide a company with the agility needed to adapt to a rapidly changing environment. And it’s everything from micro-task laborers behind Amazon’s Mechanical Turk on the low end, to Kaggle’s data scientist-on-demand services on the high end.

Example: Airbnb has become the largest “hotel chain” in the world, yet it doesn’t own a single hotel room. Instead, it leverages (that is, rents out) the assets (spare bedrooms) of the crowd, with more than 7 million rooms, flats, and houses in over 100,000 cities across the globe.

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The Free / Data Economy

This is the platform version of the “bait and hook” model, essentially baiting the customer with free access to a cool service and then making money off the data gathered about that customer. It also includes all the developments spurred by the big data revolution, which is allowing us to exploit micro-demographics like never before.

Example: Facebook, Google, Twitter—there’s a reason this model has transformed dorm room startups into global superpowers. Google’s search queries per day have risen from 500,000 in 1999, to 200 million in 2004, to 3 billion in 2011, to 5.6 billion today. While more users are becoming aware of the valuable data they exchange in return for Google’s “free” search service, this tried-and-true model will likely continue to succeed in the 2020s.

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The Smartness Economy

In the late 1800s, if you wanted a good idea for a new business, all you needed was to take an existing tool, say a drill or a washboard, and add electricity to it—thus creating a power drill or a washing machine.

In the 2020s, AI will be the electricity. In other words, take any existing tool, and add a layer of smartness. So, cell phones became smartphones and stereo speakers became smart speakers and cars become autonomous vehicles.

Example: We all know the big names incorporating AI into their business models—from Amazon to Salesforce. But more AI startups arise each day: 1,000 AI-related companies in the US raised over $27B in venture capital in 2020, according to Pitchbook. One of the most highly valued of those companies is Scale AI, a data-labeling company that supports machine learning teams, currently valued at $7.3B. Expect AI to continue transforming most businesses in the 2020s.

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Closed-Loop Economies

In nature, nothing is ever wasted. The detritus of one species always becomes the foundation for the survival of another species. Human attempts to mimic these entirely waste-free systems have been dubbed “biomimicry” (if you’re talking about designing a new kind of product) or “cradle-to-cradle” (if you’re talking about designing a new kind of city) or, more simply, “closed-loop economies.” These models will grow increasingly prevalent with the rise of environmentally-conscious consumers and the cost benefits of closed-loop systems.

Example: The Plastic Bank, founded in 2013, allows anyone to pick up waste plastic and drop it off at a “plastic bank.” The collector is then paid for the “trash” in anything from cash to WiFi time, while the plastic bank sorts the material and sells it to the appropriate recycler—thus closing an open loop in the life cycle of plastic.

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Decentralized Autonomous Organizations (DAOs)

At the convergence of blockchain and AI sits a radically new kind of company—one with no employees, no bosses, and nonstop production. A set of preprogrammed rules determines how the company operates, and computers do the rest. A fleet of autonomous taxis, for instance, with a blockchain-backed smart contracts layer, could run itself 24-7, including driving to the repair shop for maintenance, without any human involvement.

Example: While DAOs are just beginning to emerge, the platform DAOstack is working to provide these businesses with tools for success, including reliable crypto-economic incentives and decentralized governance protocols. DAOstack aims to create businesses where the only external influence is the customer.

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Multiple World Models

We no longer live in only one place. We have real-world personae and online personae, and this delocalized existence is only going to expand. With the rise of Augmented Reality and Virtual Reality, we’re introducing more layers to this equation. You’ll have avatars for work and avatars for play, and all of these versions of ourselves are opportunities for new businesses.

Example: Second Life, the very first virtual world created in 2003, gave rise to a multimillion-dollar economy. People were paying other people to design digital clothes and digital houses for their digital avatars. Every time we add a new layer to the digital strata, we’re also adding an entire economy built upon that layer, meaning we are now conducting our business in multiple worlds at once. Today we have all mastered Zoom, tomorrow we’ll be diving deep in the SpatialWeb, moving back and forth between multiple virtual worlds and our physical reality using technologies like Vatoms and Spatialweb.net to navigate the Metaverse.

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Transformation Economy

The Experience Economy was about the sharing of experiences—so Starbucks went from being a coffee franchise to a “third place.” That is, neither home nor work, but a “third place” in which to live your life. Buying a cup of coffee became an experience, a caffeinated theme park of sorts. The next iteration of this idea is the Transformation Economy, where you’re not just paying for an experience, you’re paying to have your life transformed by this experience.

Example: Early versions of this model can be seen in the rise of “transformational festivals” like Burning Man, or fitness companies like CrossFit, where the experience is generally bad (you work out in old warehouses), but the transformation is great (the person you become after three months of working out in those warehouses). Consumers are no longer searching for merely pleasurable experiences—they are looking for challenges that transform.

Final Thoughts

What all this tells us is that business as usual is becoming business unusual.

The 9-to-5 Work Model is of the Past

My children have seen my husband and the office daily to work. In their early years, I stayed home to care for them.

He woke-up, biked, dressed-up, walked to the train station, and then almost did the same again. Walked to the train station, dressed down, and biked to end his day. Sometimes he “worked at home.” Sometimes, he worked very late; through the night. Only to come home to shower, take a nap, and go back to work. This was usually when it was earning season.

Working remote was nothing new. When our first baby was born in 2002; he brought files home with a special issue laptop and a floppy disk with files. By 2005, our second arrived (it’s his birthday today). The files were online. The Laptop and files were gone, and he had a VPN connection that took him to a virtual office. His office was digitized, and we sat in this quiet deceptive phase. As he moved up the ranks, he scored a corner office. Then something interesting happened. They moved offices; his corner office evaporated; he had to hotel – no one had an office.

If he forgot to book someone else took his usual space. If he was late to work someone else took his space; how he hated those “auto bump” emails informing him that he did not have a place to do his thing that day. This uncertainty made him rethink his schedule, enforced discipline and “lived and die by his calendar.”

Waking up and going to my office space in Jersey City

Enter CORONAVIRUS 2020. The commute changed; we were home all the time. He biked even more and then not at all. Our kids had grown so I was back to work running WorkSocial. Unknowingly, ridding a deceptive trend of the vanishing office space. I was Waking up and going to my office space in Jersey City. We adapted to the lockdown. Socially distancing desks, implementing cleaning measures, rethinking our service offerings and pricing models. Mind you, during this time, all I could do make sure we helped our members and Clients. We all experienced the tragedy of the virus hit home. We all had at least a family member, or a friend, or a neighbor, that familiar face that smile just vanish.

The hustle and bustle of the WorkSocial community had changed. It evolved into a calm and serene mecca of distance, respectful work, video conferences, and phone calls. There was a sense of certainty at WorkSocial, while the world order remained uncertain.

From Disruption to Demonetization: The lease free impact hub that helps its members and community

The flexible hoteling office was all but DONE. The traditional workplace…flexible workplace became very inflexible. It was outdated. Even before the pandemic, We had reimagined the workday. We mapped the future. Safety and trust became our mantra.

We wanted people to come in and leave only once to go home. So, we served up delicious meals daily. To help local restaurants we added a lunch and snack service.

I made delicious frappes and overnight oats. I consulted naturopaths to understand how I could load them up with immunity-building ingredients like goldenseal and zinc.

We hired an all-female, all minority, all fabulous workforce. We had transformed, from an impact hub that helped companies develop productive safe satellite workspaces. And, when safe connects with colleagues to collaborate.

Something else has transformed, our clients. We started catering to public companies and large consulting firms. I saw them making the workplace benefit similar to a 401k benefit or a gym membership– not everyone will use it, but it’s an indicative marker for sophisticated workplaces of the future.

A have your cake and eat it too environment

The biggest takeaway from what we’ve found is the fascinating duality surrounding remote work preferences. People miss their colleagues, culture, and in-person collaboration, but they do not miss their commutes or the rigid 9 to 5 office day.

WorkSocial removed the commuting friction to supported by safe, flexible, local workplace options all around the country. Consider the workplace benefit as a “have your cake and eat it, too” scenario of sorts–or in other words, have your remote work and access to in-person collaboration, too.

Sharing Values: Our Carbon footprint and getting profitable

We began looking for ways to reduce our carbon footprint is not only the right thing for the environment and our future, it is a decided business advantage – a value that attracts talent and creates innovation and meaningful work. We have committed to planting 10,000 trees by 2025. We only use biodegradable products and reduced the use of paper.

Distributed workplaces have other derivative benefits: Reduce fixed costs of getting to work and office management by 60%

1. C02 emissions when you don’t drive to work
2. 470 hours of wasted time in travel and recovery per employee (10 workweeks)
3. 200 hours of time saved (missed meetings, late nights and travel delays) (5 workweeks)
4. Boost local economies
5. Take the lease liability ROU off your balance-sheet

The numbers are interesting; you can bring in 670 hours of annual productivity because you chose to rent shared office space.

Our journey from Demonetization to dematerialization

We are no longer an office space provider. Yes, office rent is a line item on our income statement. But we do so much more for our clients.

We are a shipper, a mailroom, a telecom, a travel agent, an insurance company, a caterer, a fundraiser, a wedding venue, a party planner, your admin, a helpdesk, a marketer, and your bank. We have just blended everything you need in your office into a single service provider of growth.

Democratizing our impact

What we do works and now we are proud to say that David gets to play on the same ground at the Goliaths. We are no WeWork we are even better. We have started to collaborate with like-minded operators nationally. We now have offices in NY, LA, and San Francisco.

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Emile Piters is the Vice President of IT EMEA at Medtronic, the largest medical device company in the world, which improves the lives of two patients every second globally. You’ll probably have heard of them as they are the world’s largest medical technology company. It was founded in 1949 in Minneapolis and created the first battery-powered pacemaker. Before that, cardiac patients could already be treated with electrical stimulation but needed to be connected to the power grid. During a massive power outage over Halloween in 1957, large portions of Minnesota and Wisconsin lost electricity, resulting in the death of several cardiac patients. This triggered Medtronic’s founder Earl Bakken to develop the first battery-powered, transistorized and wearable artificial pacemaker. Over the years, the company has grown massively and it is constantly looking for their ‘Day After Tomorrow’ strategy. Especially in the fast-changing world of healthcare – where big data, sensors and mobiles are transforming the name of the game – it cannot afford to keep its horizon limited to “Tomorrow”. The best example of how Medtronic is transforming its market, is the Micra, the world’s smallest pacemaker which has disrupted the traditional technology by applying leadless pacing.

I had become friends with Emile when ‘The New Normal’ came out, and we would regularly exchange ideas about the latest evolutions in healthcare. When he started applying my Day After Tomorrow concept in his own business, the challenge was to structure IT resources according to the model’s three buckets: 70% for Today, 20% for Tomorrow and 10% for the Day After Tomorrow. A significant part of his team was managing the legacy, implementing large scale IT systems like SAP to ‘run’ the business. A company like Medtronic, which has more than $30 billion in annual revenue, must ensure that these systems run like Swiss clockwork. This meant that the majority of the budget, and his people, were managing the ‘Today’ thinking, and spending a lot of effort in cleaning up the “Shit of Yesterday”. No surprise that, when they did think of Tomorrow, it was almost always by extrapolating the current strategic framework.

At the same time, Emile realized that the world of healthcare was on the verge of a set of massive disruptive changes, moving towards a highly personalized form of medicine. The world of pacemakers could transform from a world of electronics into a world where data and digital platforms would become extremely important.

Gradually Emile started to align the two parts of his strategic framework – the existing and the emerging business – and began to allocate more and more efforts, budget and resources to the Day After Tomorrow. The metaphor that slowly emerged from this was that of the Hourglass.

I’m not sure how long it’s been since you picked one up, but we all know that an hourglass has two parts. The TOP part of the hourglass is where the sand flows gradually downwards, through the middle section, slowly filling up the BOTTOM part.

If we apply this model to our strategic thinking process, the TOP part is composed of SENSE and TRY.

Sense

The SENSE element of the hourglass model is our radar screen for all things new and exciting: new ideas, technologies, models, concepts, developments, you name it. In short, a way to spot “those bits of the future that have already arrived”, to quote William Gibson.

We are experiencing the Never Normal, one of the fastest-changing times in modern history. It is fired up by the non-linear dynamics of the network and a series of permanently interacting novelties. Basically, we need a better radar screen, a wider field of vision, and a deeper sensing network to keep up. We all need to be more alert, pick up signals faster – however weak and feeble they are – and continue to develop and sharpen our sensors for the next new things. Star Trek’s The Enterprise sported a ‘long-range sensor scan’, with which it could detect incoming starships long before they would show up on the visual monitors. That’s the kind of technique that companies have to learn and develop. It’s not enough anymore to attend the annual conference in your field to keep up to date. You have to scan for developments outside of your normal field of vision, understand adjacencies, developments in other sectors, and be extremely open-minded for opportunities and serendipity.

The second element of the top part of the hourglass is the TRY segment. Once you have identified ingredients for change in your ‘Sense’ section, you need to experiment with them and create an environment where you can test ideas fast and safely. Startups have this modus operandi built in in the most natural manner. They are notoriously good at implementing lean methods of experimentation, building Minimum Viable Products, and testing those with users.

Eric Ries was a young Silicon Valley engineer, who had experienced firsthand how tight budgets forced startups to work in a certain way. They ‘naturally’ applied a method of lean development, testing alternate versions of a product with users to get early feedback, and learning from those findings how to quickly iterate to improve the product. It’s quite simple: a startup has no alternative. They are in a constant race against the clock, permanently in fear of running out of cash before they hit sustainable revenue. Large corporations, on the other hand, do have that luxury, unfortunately. I say unfortunately, because the sad result is that whatever is being developed is often too late, and off the mark.

When Ries started working in Venture Capital, and advising many startups, he decided to write up his findings into his seminal book “The Lean Startup”. It became an instant bestseller and has been widely adopted, not just in the startup world, but in many traditional organizations as well. The core element of Ries’ method is to accelerate the feedback loop.

When startups build a product, they build a Minimum Viable Product or ‘MVP’. The difference between a ‘normal’ product and an MVP is basically that the latter is just ‘good enough’ to be tested. A Viable product is the product that you would LOVE to build (and that’s probably being developed by companies that are much better financed than you). A Minimum product, on the other hand, is an underwhelming – yes, maybe even ‘crappy’ – version of the concept that you want to test. It’s in fact so bad that nobody would want to actually use it. The intersection of the two, the Minimum Viable Product, is the best possible version you can build for testing with early users: one that will bring you enough valuable input for your next iteration cycle.

According to Ries, this cycle is quite simple: Build, Measure, Learn, and then Start over. When you have built your MVP, you launch it and gather as much user feedback as you can. You then analyze these findings and deduct key learnings. That input should give you directions on how to quickly develop the next version of your product. And then you start right over.

Only once you have gone through a number of cycles of your ‘lean startup’ routine, can you start fully developing your software or products. This approach has been widely adopted since first proposed, and just as much by corporates as by startups. It’s also often used in combination with Design Thinking, which can help better understand and serve customers and help define the MVP’s initial set of requirements.

This ‘TRY’ segment of the hourglass can be an extremely powerful mechanism to experiment in a Lean fashion. With techniques borrowed from the startup world, companies can set up shop to test, decide what works, and then adapt or move forward.

Scale & Run

And so we have arrived at the lower section of the hourglass, where we can ‘SCALE’ and ‘RUN’. It’s not hard to understand why this part tends to be best developed by successful traditional companies. This is where companies decide what is REALLY worth putting their money into by narrowing the concepts, ideas, and projects of the experimentation phase through the bottle-neck between the top and lower half of the hourglass.

When a concept, a project or an idea has percolated through the top of the hourglass and is considered likely to be a success, it needs to be SCALED out throughout the organization as quickly as possible. After that, it is crucial to RUN the operations as smoothly, efficiently and reliably as possible.

One could apply the hourglass model for the very specific function of the Information Technology department, but some companies might have an appetite to use the hourglass model on their entire strategic portfolio.

Top To Bottom

When Google rebranded itself as ‘Alphabet’ in October of 2015, it seemed like a strange move for a company that had conquered the ‘search’ market so incredibly fast. They had not been the first mover in that field, though. It is relatively easy to conquer a market with a brand-new offering when you’re the first, but in the search business, companies like Yahoo and Altavista had been around for quite some time. And Google killed them almost overnight.

But that was the past. Google knew it had to keep vigilant not to fall into the same trap of ‘Kodak’ or ‘Xerox’ and maybe even General Motors or General Electric: leaders that were once synonymous with a market, only to come crashing down after failing to reinvent themselves. As Google grew, it became clear to them that it was not easy to keep on innovating from the core, and they were terrified of turning obsolete in the same way their former competitors had.

Alphabet turned out to be much more than a cosmetic name-change. It was an elaborate exercise in strategic horizon planning. The high-growth, high-profit elements of the company (including search, YouTube and Android) became part of the ‘core’ offering of Alphabet: responsible for generating the lion’s share of revenue, cash-flow and profit. In 2017, for example, 86% of Alphabet’s revenue still came from search-related advertising. But next to this ‘core’, Alphabet made quite a few ‘Bets’, including Nest for home automation, Verily for their Healthcare activities or Waymo that handles the business of autonomous cars. And let’s not forget the infamous ‘Google X’ lab, the most famous ‘Bet’-factory of all.

When you look at this from an Hourglass model perspective, Alphabet’s ‘Bets’ include daring concepts like connected contact-lenses or driverless cars. Alphabet recognized that these experimental ideas would NEVER survive if they were tried and tested inside their ‘CORE’ business.

Zero To One & One To N

One of the rawest accounts of the startup universe has to be the brilliant book ‘Zero to One’ by Peter Thiel. Thiel co-founded Paypal with Elon Musk and has evolved to become one of the most influential investors in Silicon Valley. Based on his experience of running, and investing in startups, he taught a number of classes at Stanford and eventually turned this material into ‘Zero to One’. Its premise is that creating Something from Nothing – zero to one – is the essence of a startup.

I would argue that this same dynamic is also the essence of the TOP part of the hourglass. They’re both about focusing a wide lens onto disruptions and opportunities, prioritizing, selecting, and then experimenting and testing. They perfectly match, just up to the point when a ‘golden nugget’ appears, which you then have to drop into the BOTTOM part of the hourglass. We can call this second part of the process ‘One to N’. This is where you scale and grow (going from one thing-to-many) the business in the most effective way possible.

Very often the ‘SCALE’ part tends to reside in a project mode, with scores of nervous project managers trying to roll out brand-new concepts into the organization. The ‘RUN’ part, in its turn, is the beating operational heart of the organization: it’s where we strive for bottom-line results and apply traditional management techniques and Key Performance Indicators to achieve success.

One of my favorite quotes, attributed to Nelson Mandela is this one: “I never fail, I either win or learn.” For me, that is the true essence of learning from our mistakes. We all know ‘Fail Fast, Fail often’, a common mantra in the startup scene. Of course, the whole idea behind “fail fast, fail often,” is not to fail, but to be iterative in how you learn.

A LAT Relationship

The top part of the hourglass model – the Day After Tomorrow section – consists of being open for new things, failing fast and learning, and creating more clarity about where you need to place your bets. The bottom part is about producing the scale and bottom line as the foundation of your business. That’s your Today, and your Tomorrow.

I have observed how Emile Piters gradually but very decidedly shifted his organization towards the hourglass model. First, he made sure that his IT spending was pushed significantly towards the TOP part: it evolved from 5% at the top, and 95% at the bottom, to a situation where it’s trending towards a 30/70 ratio. But he also knew that it was not just about moving funding from the bottom to the top: the two parts of the hourglass required different skills, mentalities, cultures and leadership. And they had to be organized, managed and controlled in different ways. Above all, they had to be CONNECTED. They basically needed a perfect LAT (Living Apart Together) relationship. So Emile installed a mindset throughout the organization where the TOP part of the hourglass was fully aware that they could not fulfill their potential without the Bottom part of the hourglass, which generated the necessary funds, cashflow, and scale. And the BOTTOM part of the hourglass had to be fully committed to the top part of the hourglass and convinced that it was vital for remaining relevant in the Day After Tomorrow. Both parts were (and still are) interdependent to stay essential and relevant for the future.

I have observed many companies that have a brilliant bottom part of the hourglass but were unable to create the top part that would allow them to remain future-proof. But I have equally seen many companies that did develop that latter capability, but were unable to get the top and bottom parts of the hourglass to align and create common objectives. Only if you manage to properly connect and align the zero-to-one AND the one-to-n will you have a solid formula for tackling your Day After Tomorrow.

I believe this could be the ideal recipe for the Phoenix (corporate companies that know how to reinvent themselves on a permanent level to keep up with these fast-moving times – and also the subject of my upcoming book, ‘The Phoenix and the Unicorn‘, which will be available as of March 2020): a mechanism to keep an open mind, understand new opportunities, and the possibility to bring innovations from idea to scale in a continuous process.

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As the flexible office industry sees explosive growth in New York and beyond, it’s increasingly ditching the freelancer market and targeting blue-chip clients at a rapid rate

The 11-story Beaux-Arts building at 88 University Place in Greenwich Village is the kind of property every co-working company dreams of occupying.

Sitting just south of Union Square and partly owned by fashion designer Elie Tahari and WeWork co-founder Adam Neumann, it has small floor plates that can be easily turned into cozy, communal work stations, and the nearby NYU campus promises a steady supply of young, well-heeled freelancers and aspiring entrepreneurs.

In late 2015, WeWork signed a lease for eight floors, totaling 70,000 square feet, at the building, with plans to convert it into a huge co-working hub. But it didn’t turn out that way.

By 2017 the flexible office industry had changed, and so had WeWork’s plans for the building. That April, news broke that 88 University would not house freelance graphic designers and other creative types in the East Village. Instead, computing giant IBM agreed to take over the entire property as a temporary New York office while it searched for a more permanent space.

WeWork — which is now Manhattan’s largest office tenant and occupies more than 7 million square feet throughout New York City — would still furnish the building, staff the reception desk and keep the coffee and beer flowing.

But for all intents and purposes, the property became an IBM corporate office.

“Real estate’s not IBM’s core business,” said Glenn Brill, a managing director at FTI Consulting, which advises co-working companies and landlords. “The less time they spend on it, the better.”

The booming co-working industry, which has grown its footprint in New York City by 600 percent since 2009, isn’t what it used to be.

Marketing materials often depict groups of young, attractive colleagues bonding in shared office spaces, sitting on couches with laptops and working in between pingpong matches.

But in reality, co-working — or at least that version of it — is no longer driving the bottom lines of flexible office providers. The rapid growth of firms such as WeWork, IWG, Industrious and Knotel now has almost everything to do with serving the basic office needs of established corporations like IBM and UBS. And what’s been branded as a revolutionary answer to office life in the 21st century now more closely resembles a business model that’s been around for decades: commercial property management.

While shared office space for freelancers still exists of course, industry leaders say it’s a shrinking portion of the business.

“Co-working doesn’t work,” said Marcus Moufarrige, COO of the Australian company Servcorp, which has offered flexible space services since the late 1970s. “The latest iteration of it is not that new; it was around pretty extensively during the dot-com boom. And it didn’t work then, either.”

A different tune

While some potential co-working users are still being sold on the entrepreneurial community and the freelancer economy, investors and landlords are increasingly hearing a very different proposition.

In 2012, Jamie Hodari, a former hedge funder who had just launched the co-working startup Industrious, dialed into an investor call with a group of podiatrists in Michigan who wanted a piece of the action.

The co-working concept — which started more than a decade ago with the aim of bringing lone Silicon Valley hopefuls together under one roof — had become an international phenomenon with more than 2,000 locations worldwide. Hodari was selling the latest way to curate shared space for budding entrepreneurs.

But a year later, Hodari’s pitch to another group of investors had changed: Industrious wanted to target more than just graphic designers and app developers. It would also go after traditional office tenants with short-term leasing needs — a large market that was neither new nor deserving of a neologism.

“We had a very boring observation: This is an outsourcing industry,” Hodari told The Real Deal in a recent interview.

In the five years since, the top co-working companies have made the same observation. Rather than catering to individual freelancers and small early-stage startups, the industry is increasingly targeting much larger tenants.

Companies of at least 1,000 employees, which WeWork calls its “enterprise clients,” now make up a quarter of its memberships and revenue. Knotel, which never tried the individual-member model, claims companies with multiple offices and more than 100 employees account for 95 percent of its customers.

Manhattan’s top commercial brokerages — some of which now compete with co-working companies in office services — are acutely aware of the shift. News broke late last month that CBRE is launching its own flexible office management arm, called Hana. That business will compete with WeWork, Knotel and others for partnerships with landlords.

CBRE closely tracks the industry and divided its rapid growth into three distinct phases, starting with the “executive suites market,” which predates 2009, the “birth of co-working,” which took off in 2012, and the “rise of enterprise,” which began in 2016.

Today, the biggest co-working companies vie for partnerships with landlords to manage space for blue-chip clients, while offering everything from coffee and beer to facilities maintenance and IT. Some are also expanding into brokerage, interior design and data services in pursuit of additional revenue, creating a new wave of competition for companies that specialize in those fields.

What the co-working industry has retained from its early days is its aesthetic sensibility — creative office layouts and post-industrial chic.

Insiders see the expanding business as a way to change the entire commercial real estate industry by making leases more flexible and adding more amenities to office buildings. “The change is they’re taking this idea of flexibility and pitching corporate America,” said FTI’s Brill.

“Long live co-working”

As the industry continues its shift, a handful of property owners are even launching their own hip co-working brands.

At Rockefeller Center, Tishman Speyer’s Studio — which gives its members access to Clubhouse by ZO, an exclusive lounge where they can rest in communal “nap pods” and attend meditation classes — is one example.

Thais Gallis, a senior director at the family-owned real estate firm, said one of the reasons behind launching Studio was the hope of creating an “entryway for new companies into our properties.”

Among the city’s office landlords, Tishman Speyer also has one of the highest concentrations of co-working tenants, including both WeWork and IWG, data from the commercial brokerage Avison Young shows. The firm’s two-pronged approach of bringing on co-working tenants and starting its own brand speaks to the rapidly growing demand for such services.

Scott Rechler’s RXR Realty, which has invested in several co-working funding rounds, is also getting into the members-only business. RXR recently announced an agreement with office amenities operator Convene to design and manage an exclusive penthouse club at its 75 Rockefeller Plaza office tower.

Other landlords are taking it a step further and teaming up with co-working companies on development projects.

Knotel partnered with Brooklyn-based EcoRise Development to build an office property in Gowanus that will allow Knotel to manage up to 300,000 square feet at the site, and WeWork joined Rudin Management and Boston Properties to build a 675,000-square-foot office project in the Brooklyn Navy Yard where it will occupy a third of the space.

Megan Spinos, director of strategy at the design firm Vocon, which creates social spaces for both co-working companies and large companies, described a major shift in the U.S. workforce that’s given the communal working trend legs.

“Where we used to be part of a Kiwanis Club, we don’t really do a lot of that anymore. And because we spend so much of our time forging ahead with work life, there are different ways that we’re trying to [create community] in the workplace,” she said. “Sometimes our work is really solitary and we’re looking to form relationships.”

Mark Gilbreath, who runs the online office listing platform LiquidSpace, said the promise of a shared workplace utopia with countless amenities is “intoxicating.” But as companies like WeWork hit the limits of demand from wide-eyed entrepreneurs, they’re catering to bigger firms at a fast-growing rate, he noted.

“Co-working is dead,” Gilbreath said. “Long live co-working.”

Pitching big business

WeWork’s deal with IBM was part of a broader push to distance the co-working giant from its original customer base.

Its Powered by We service line, which it launched in 2017, facilitates full offices and even corporate headquarters for major corporations. This past July, the company announced it would renovate and manage UBS’ 100,000-square-foot office in Weehawken, New Jersey.

The co-working giant is also zeroing in on midsized firms. This August, it launched HQ by WeWork, a service that allows midsized firms to rent out their own floors, implement their own designs and keep interactions with other companies to a minimum while still tapping into perks like regular cleaning and flexible lease terms.

WeWork’s chief growth officer, David Fano, acknowledged that it’s “difficult” to build a global flexible office brand by focusing only on small tenants. “There’s definitely a ceiling on the demand for that stuff,” he told TRD. “And as companies grow, unless you can serve the full life cycle of an organization, it’s inevitable they’re going to leave.”

Fano insisted that WeWork never saw itself as just a service for freelancers and small-business owners, but said it underestimated the potential demand from larger clients in its early years.

“In the first half of [WeWork’s life], I don’t think we had such clarity on the enterprise potential,” he said.

Other flexible office providers like Industrious, Bond Collective and IWG also say bigger companies make up the bulk of their revenues. Industrious’ rapid shift from freelancer hubs to Fortune 500 office suites was prompted by an unexpected demand from a single customer.

In 2012, as Hodari made his first rounds of investor calls, his company provided a small space for then-two-year-old social media startup Pinterest. A year later, Pinterest expanded. And then it expanded again. Soon enough it had ballooned to the point that its executives said they needed a proper headquarters.

Today, Pinterest is valued at $12 billion and occupies 100,000 square feet at 651 Brannan Street in San Francisco. “They said, ‘We actually will get a better outcome if you do this,'” Hodari recalled, after Pinterest executives asked his company to manage the new headquarters.

The Pinterest deal made him rethink Industrious’ business model, and the firm’s marketing materials dropped any reference to freelancers and pivoted toward medium to large companies.

“That’s where the dogfight is right now — pitching to Johnson & Johnson, Exxon, Airbnb, Spotify that you are better than anyone else at providing a workspace their employees will be happy with,” Hodari said.

Industrious now has partnerships with General Motors, Lyft, Pandora, Freddie Mac and Chipotle. “We started to shift the balance of our customer set quite quickly,” Hodari added.

The freelance spillover

Knotel, one of WeWork’s biggest and youngest competitors, rejected the co-working label from the start.

Its CEO, Amol Sarva, who co-founded Knotel in 2016, said it’s not just that co-working companies underestimated demand from big firms — they also overestimated demand from small ones.

“A really superficial analysis of the labor market would be ‘Oh, half the market is freelancers’,” he said, pointing to statistics on how many people file tax returns as freelancers and contractors. “But do freelancers work alone? Do freelancers have their own offices?”

Most who do use offices work for larger companies and are often embedded in their spaces on a part-time basis, Sarva said. The industry shift was inevitable, he argued, but it’s having a spillover effect.

“This huge supply of freelancers who work in ever-shifting teams but together at companies — they need an office,” Sarva added.

The transition to bigger clients and a greater focus on property management impacts how firms like Industrious and WeWork design their spaces. “The large enterprise doesn’t want to live in a glass box side by side with a bunch of other startup companies with 47 square feet per person,” LiquidSpace’s Gilbreath said.

It’s not just about open floor plans, either, Vocon’s Spinos noted. “It really is a science based on how clients are going to use that space,” she said. “It’s not just open — it’s enclosed, it’s private, it’s semiprivate. It’s a bigger variety.”

Beth Moore, a managing director at CBRE who leads the brokerage’s flexible space business nationally, said major corporate clients are in the “dating” phase with co-working companies, trying out a variety of them for different office needs.

She said clients now expect much more than an edgy look or hip mission statement; when they tour new locations, they want to see a proven track record with larger companies.
“The worst-case scenario is you leave a space and say, ‘That was a cool furniture showroom,'” she said. “It’s not as easy as desks and comfy furniture and bad posture.”

“Asset-light”

As the co-working industry targets big corporate clients, the power dynamic with landlords is also changing.

Until last year, all but one of Industrious’ agreements with building owners were long-term leases that allowed it to sublet the space to other companies.

Behind the scenes, though, Hodari was pitching landlords to instead enter management contracts — revenue-sharing partnerships between the building owner and office operator.

While commercial leases often carry terms of 10 or more years, management deals allow third-party companies to occupy the space on a more flexible basis.

It took a while for landlords, who were cautious about doing away with long-term guarantees, to warm up to the idea, Hodari said. But the fact that they get a piece of the profits was a key selling point.

In the past 12 months, Industrious’ business model has flipped. Now, 75 percent of its new contracts are management agreements, which allow the firm to take on the office market’s version of a hotel franchise.

Knotel and Convene have also largely followed that model. And while WeWork still relies mostly on leases, the co-working giant has signed management agreements at a handful of locations.

In Silicon Valley’s venture capital circles, the shift into the management world — the so-called asset-light business model — is extremely popular.

Just as Uber refrains from buying its own cars and Airbnb typically refrains from buying homes, co-working companies are increasingly dodging the expensive liabilities that come with owning or leasing office space.

Silicon Valley-based Norwest Venture Partners led a $60 million funding round to Knotel last month, for instance, while the Los Angeles firm Fifth Wall Ventures led an $80 million funding round for Industrious in February.

“One of the most prevalent killers of companies is a mismatch in the duration of a company’s assets and liabilities — master leases are a long-term liability,” said Fifth Wall co-founder and managing partner Brendan Wallace.

Mindspace, an Israel-based flexible office startup that has 28 locations in Israel and Europe and recently expanded into the U.S., is also moving toward partnership agreements, said Itay Banayan, the company’s head of real estate. These deals make it “easier to weather the cycle,” he said, arguing that long-term lease obligations can become a burden to both co-working companies and landlords during a downturn.

Managing expectations

Landlords say their preferences are based on other factors, such as bank financing and prospective buyers.

Bob Savitt, founder of the New York-based office owner Savitt Partners, which operates a co-working spot at its 530 Seventh Avenue office building, said the decision between a long-term lease and a management deal largely boils down to a landlord’s investment strategy.

“If I want to sell a building, and I have a 10-year lease with a decent creditor and a security deposit, I can monetize that,” Savitt said. Long-term commitments can increase a building’s value in the eyes of potential buyers, he added, though “there’s not one preferred structure.”

Some landlords have taken to management agreements for the profit-sharing part of it, but many banks are hesitant to lend on buildings with such arrangements in place. Most traditional lenders still prefer the perceived stability of long-term leases, sources say.

At the same time, banks have greenlighted one of co-working’s riskier business practices. Many of WeWork’s leases have come without corporate credit guarantees, an extreme outlier in the generally conservative office leasing market, said Colliers International investment sales broker Yoron Cohen.

“It was a brilliant business plan,” Cohen said. “Landlords were happy to take [co-working companies] as long as the banks were willing to consider them as [creditworthy].”

He said what lenders see as WeWork’s “bankability” could lead to “spot spots” during a downturn — leaving landlords with co-working tenants that can’t pay rent.

“We all pray that it will end well,” Cohen added.

Inn, the future

While co-working is largely evolving from open floors to corporate suites, many in the industry say its next phase will be most akin to hotel flags.

A growing number of co-working companies will have their own distinct brands and different tiers of service similar to the budget, boutique and ultraluxury models that hospitality firms use. And as with big hotel corporations, it’s not inconceivable that a small number of firms could dominate the market.

WeWork’s executive hires in recent years show the industry is taking more than just a page from the hospitality sector. Michael Gross, its vice chair, used to run Morgans Hotel Group; Richard Gomel, its head of co-working, is a former Starwood Hotels & Resorts executive; and Pato Fuks, its regional manager for Latin America, founded the Argentinian hotel operator Fën Hoteles.

“WeWork is fundamentally trying to create a lifestyle brand,” said FTI’s Brill. “And that’s what hotels do to a large extent. That’s how they market themselves.”

In addition to its gym line and co-living division WeLive, the co-working giant now has half a dozen other lines of business including Off the Shelf, Powered by We and custom build outs.

IWG has also broadened its portfolio with Regus (its predecessor), Spaces, Number 18 and others. For most co-working firms in 2018, the goal is to capture all tiers of the office market — from ground-floor freelancer hubs to executive corner offices.

“Like within Hilton or Starwood, there are a lot of different brands,” CBRE’s Moore said. “We’re already seeing that take shape.”

Credit:
Post Author: Konrad Putzier, Will Parker and David Jeans
Website: www.therealdeal.com

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