263. David Brown On Why He’s Oversold His Flex Desks In His Two London Neighborhood Coworking Spaces
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TRANSCRIPTION
263. David Brown On Why He’s Oversold His Flex Desks In His Two London Neighborhood Coworking Spaces
00:00:03 Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how-tos in Coworking. I owned and operated coworking spaces for eight years, and then served as the executive director of the global workspace association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you thought-provoking operator,
00:00:29 case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the Coworking industry. Welcome to the Everything Coworking podcast. This is your host. Jamie Russo. Thank you for joining me today. I am super excited to introduce this conversation to you. You, I think you're really going to enjoy it.
00:00:58 It is really inspiring in a few different ways. We're going to get to that in a second. First, I want to give a big high five to Nina Molina, who is the Community Manager at Spoke Coworking in Tucson, Arizona. Nina is Community Manager certified. So congrats to her for finishing her certification. We are thrilled to have you in our Community Manager University program.
00:01:23 So today's guest actually has been in our Community Manager University program for a long time with his wife, Ashley, and we have not connected live because he's in London. So David Brown moved his family of five to London from North Carolina in 2019, and attempted to open his first coworking space in a London neighborhood in 2020. That part didn't go well, but I think you're really going to enjoy this conversation because David is super clear vision of what he wanted to accomplish and he has not wavered from that.
00:01:59 So the spark that drew us to get on a podcast to have a conversation is David responded back to my weekly newsletter, talking about how it's super important to align your flex supply with local demand and how oftentimes you, most people don't get that right. And they don't oversell their flex desk. And he responded and said, I oversell my flex desk.
00:02:27 You know, we're doing really well with this model. So he has the 3000 square foot space in a neighborhood in London actually has two locations. Now he has separate websites for his locations, which I won't debate with David about, but I don't think is good for SEO. So I didn't know, he had two locations, both neighborhood spaces. So I linked to both of them in the show notes,
00:02:47 you might want to check them out 3000 square feet, 112 members, which is amazing. Most of those members are on a 10-day plan. So super flexible. He's in a very dense neighborhood in London. London is way ahead of the rest of the world in terms of flex and Coworking adoption. They have the highest per capita number of flex coworking spaces and have had for a long time.
00:03:09 So that is part of the success, right market, right location, super dense, and right offering. So, you know, Coworking opening a coworking space that's successful is like part art, part science, right? You can sort of reverse engineer the business model and the operational things, and you can do everything right. But I also think that David and his team have gotten the art part of the business really,
00:03:37 right. They are just super intentional about what they're trying to create. Community is first knowing their members really well, making their members feel seen and a part of something, and they make their decisions to align with that focus. And he talked about that in our conversation and I was just really inspired by sort of how clear and intentional they are about what they're trying to create.
00:04:05 So, you know, he's, he's in a really dense market and he got the offer right. Still, 3000 square foot is 10 square feet is challenging on a lease. So David's new location in another one that they're working on, they're doing with partnerships with landlords, which will make the model work better, but 112 members in 3000 square feet. It's pretty amazing.
00:04:28 So the one other quick highlight I want to call out before we dive into the conversation is David talks about, I've never heard anybody say it like this, and it makes so much sense. I asked him about their event business. So they have a, use their coworking, like their flex space as event space. If you look on their website, it looks like it's a completely separate space.
00:04:49 So they really, really leveraged the 3000 square feet that they have. And they have events of all sorts of flavors in their space. And this works really well in their, in their neighborhood where people don't have space for birthday parties and open mic nights and all sorts of community events that they host. And the way he framed it is he said, look,
00:05:12 Saturday and Sunday are 28% of the week. And so, you know, they're kind of not earning their keep if we don't monetize them. And so the way he looks at it, as he's trying to get his event revenue on the weekends to kind of move up to the 25% range of total revenue, and they're doing a very healthy event business, which helps with the smaller space.
00:05:33 So I think he's just doing a lot of things that are really smart and I'm not going to spoil all of the nuggets, but I think you're going to love listening to him, talk about his business and how he thinks about serving his community and how the model aligns with their mission and vision. So without further ado, here's my conversation with David. I am here with David Brown,
00:05:55 he's the founder and director at The Good Space Company. And I can't wait to share his story. I have to share first that this was probably overdue. David and Ashley have been in our Community Manager program. And so I've kept an eye on, on their space. But David responded to my email about how it's really hard to sell flex desks and said,
00:06:18 why sell flex test? Why do I not have a problem selling flex desks? I said, let's talk about that on the podcast. So David, thanks for making time to do this. I am looking forward to hearing your story. Yeah. Thanks for having me really glad to be here. Yeah, it does. It doesn't feel like a long time coming.
00:06:34 Okay. So let's start with your, your Coworking story. You have an interesting background. I mean, nobody ever has a background that necessarily makes sense for Coworking, but born in Houston spends some time in North Carolina. Now you're in London and your sort of work background, all roads don't really lead to Coworking if you look at it. So tell us how this happened.
00:07:00 Yeah, of course. Yeah. So I spent probably the first chunk of my career in finance banking and sort of, you know, a general business overview, if you will, and always had an eye, a thought towards entrepreneurship, but didn't have any appreciable skillset. And you know, I wasn't an engineer, so I couldn't start an engineering firm.
00:07:22 I wasn't an architect. So it's hard to go build something when you're like, I don't have a thing. So kind of just was waiting for the right idea or the right thing to come across. And, you know, a variety of factors led us to opening a textile manufacturing company in North Carolina. And I ran that for a few years and we were producing lots of home decor products among,
00:07:49 amongst other things. And so that was kind of one of the first forays into business ownership and, and trying to do something on my own and learned a ton there. And as I was working there, one of the things I did was I joined coworking space in town because, you know, working next to sewing machines, worrying or people running around and it just wasn't conducive to the kind of work that I was needing to do,
00:08:15 which was, you know, keep track of the accounts and make phone calls and do all these things. So I joined a coworking space in town and, you know, once we, I sort of exited that business Coworking was something that was on my mind and I thought maybe there's something for me here. So I ended up getting into it though. We did it overseas,
00:08:34 which was, which is another piece of that. Totally. Okay. So yeah. What was the draw to move to London? Yes. Your Southern accent, you know, who do you listen to? Caitlin Parker. Okay. He has a podcast. It's a little more like maybe big picture asset owner driven around like flex workspace. But I love listening to him cause I think he's from Atlanta and he has this like Southern accent,
00:09:04 but he's lived in London for a long time. So it's like, I always find that such an interesting mix. Yeah. I'll have to look him up. That's great. But while I was working in the coworking space back in Raleigh, you know, I kept thinking every time I would wake up and I went, decided to go to work, it was,
00:09:21 it was this debate, whether I should go all the way in, but the space was kind of in the central city. So it was not a far journey, but it was more than like popping around the corner. And I would think I would make this debate about, should I go to the coffee shop? That's a five-minute walk or should I go all the way into the workspace?
00:09:36 Yeah. One day I was like, why can't these things be the same? And so, as I was kind of thinking through that model, we took a holiday to visit some friends in London. And I was, I was walking around some of the kind of villages neighborhoods in London. It just all made sense. And I was like, this is where this really works.
00:09:57 There's 20,000 people in a circle, you know, a five-minute walk kind of circle. So there's plenty of demand within a walkable radius. And the neighborhoods are very kind of village the village sensory. And so having a space right there, it really made a lot of sense, especially when sometimes it can be an hour commute by tube into where their office might be.
00:10:20 So we have this idea in the kind of fall spring of 20 18, 20 19, and started to make our move middle of 2019. And we're planning to open the space. We actually had an opening date for April 1st, 2020. And of course, that didn't exactly happen. How many people, I mean, you listen to the podcasts like that, that story is so common right now.
00:10:46 Yes. But here you are. So thank you. Yes. Thankfully it's worked and we're still, still running and expanding, so that's good. So you move a family with three kids and you had to acquire some commercial real estate in London, although the interesting thing. So to get to your flex desk question. So you kind of like ran into a lot of things that are so relevant now,
00:11:11 right? Your whole like human behavior of like having to talk yourself into, and you're not like a lazy guy, right. You're a business owner you're like, but this debate every morning, like, do I really want to go all the way into, you know, downtown or coffee shop, which is like suboptimal in some ways, but closer. Right,
00:11:32 right. And now we're like in this phase of human behavior, where are you? Everybody's like, where are all the people? Well, this thing called inertia has everybody like at home because yeah. It's just easier like path of least resistance. But your concept of like, why don't we build spaces closer to where people live, maybe work in North Carolina because there's not the density,
00:11:56 but, Well, yeah, what we found is that if you get in a car, it doesn't matter if it's five minutes or 20 minutes as much instead of a drive or a walk instead of a longer commute. That totally changes the argument. Yeah. The density piece is super important. So you also brought to mind with your flex desk notes and I was thinking that kind of density that you're describing is not there,
00:12:23 not that many cities that are that dense. Right. Because you need a big city and it needs to be, it's like LA is not that even right. Like it's a big city, but it's drivable. Yeah. I remember. And so a couple things about London, right? There's like more flex and Coworking in London per square mile or whatever than anywhere else.
00:12:44 So it's an interesting market and people are more aware, which I think, yeah. So, okay. So you've found this neighborhood. Yeah. Tell us the rest of the story. So 20 beds found the neighborhood. Yeah, Exactly. As we found the spot we're in the neighborhood. I mean, we live five minutes from where we ended up opening our first location and really we ended up trying to replicate kind of what I wanted in a work-life balance.
00:13:11 Right. So my, my daughter's school is, you know, on like where we walked past the workspace to her school. And then I come back another minute and I'm back in the space. And so we really, you know, there's, there's restaurants, there's other things it's just like kind of 15 minutes city dynamic that we've heard a lot about over the last couple of years.
00:13:30 And so we really just wanted to replicate that and find out, you know, I'm, I'm certain, there are a bunch of people who, you know, would like to have a place that's like proper place to work, good internet, good coffee and people around because working from home or while the flexibility is really enjoyable, actually being at home, usually isn't that great,
00:13:53 particularly in a big city where your house is not very big, your, your flat, maybe, you know, 700 square feet, or you might share it with three or four different people or you might have your kids and they're all right on top of you. So having a place out of the house, but it's still really convenient, gives you the flexibility and you kind of get both hand in that scenario.
00:14:14 And so that was the pitch and the pandemic basically convinced everyone that it was the right idea for us. Like we were trying to think that, you know, before a pandemic and then they said, well, now everyone's remote. Go find it, go figure it out yourselves. And so we had people, you know, once we finally were able to open,
00:14:33 we waited for the first kind of wave of COVID to go by. And kind of later in the summer, we were able to open the doors, kind of, we spaced it out the seats and, and didn't have as much desk density inside the space as we would have otherwise, but open the doors. And, and really just that we actually had a marketing campaign that was leaving the house,
00:14:53 not the neighborhood. And it was, the idea is, you know, just, just come out, Mike and everyone was really craving it. We had so many people, I can't say how many people came in and they said, oh my gosh, this is exactly what I need. I need a place to go. You know, there was usually like three use cases.
00:15:09 It was, my office is closed and I don't have a place to work at my house. That's very productive. So I need a place to work. I'm happy to work remotely, but I don't my kids or my partner or my son is in the way, so I need to get away or I'm just really lonely. And I just want to,
00:15:28 I, you know, I live by myself and I need interaction with humans. And so we were answering kind of all three of those four people. And so it really took off for the fact that there was a pandemic and that people were still being encouraged not to leave the house. Like we really kind of took off, you know, we were doing all of the safety protocols that we needed to do,
00:15:48 but you know, just pretty quick that we were saying, I'm sorry, we're, we're kind of out of space because you know, at that time, and then we were able to expand it once we had, we could put more seats back in. So it's been, it's been a great Dorothy, but it really feels like we were just helping people solve a problem that they,
00:16:05 all of a sudden knew that they had Yeah. A little right place, right time, but also right. Offer. What do you think it is, you know, besides the sort of internal factors that you were some internal, external, but what is it about the space or the vibe, or what do people love about it? Yeah. You know,
00:16:26 people do often come in and they're like, we actually have a competitor that's kind of around the corner opened about the same time as us. So often no visit both places before they come into ours. And, you know, often if they do end up joining, they say, you know, we just liked the vibe here. There's something about what we do that,
00:16:43 that resonates. And, you know, sometimes that's hard to really quantify, but I, I believe that our intention is that the space is not, it doesn't feel like an, an office. It doesn't feel like you're going to work in the sense that, you know, you have to be put together. We really want to feel like you're going to a friend's place or,
00:17:01 you know, that cafe kind of culture, but with all the things that you really need. So we, we have music playing, you know, we don't have a reception desk. We, we try to meet people like walking in and kind of standing around rather than like behind a desk. You know, a lot of people walk in. They're like,
00:17:17 oh, like, can I buy a coffee? And I was like, I'll give you a coffee if you want to come hang out for a minute. And so, you know, it sometimes gets confused for a cafe or a pub and we, we try to keep the door open. We, we happen to open right up onto the street. So people walk in and wonder what's going on.
00:17:34 And, and so that's been great marketing obviously, as people walk by. So I think that's it. I mean, it's really, we just try to be, you know, it's a joke. We, we try to be normal people and just welcoming and kind, and, you know, we don't have like a specific niche that we catered to in terms of industry or anything else.
00:17:51 And it's just sort of like, Hey, like, we're cool, you're cool. Like let's work together. All right. You know, sort of this idea, like original Coworking kind of started like, Hey, I need space. You need space, let's push our tables together and like work together. And we kind of wanted to bring as much of that to it as we could with it being like well-designed and,
00:18:11 you know, thought through not just like vintage, you know, thrift store stuff, but it was like, let's make it so that people feel comfortable to walk in and just try something, you know, that they don't have to feel like they have to ascend to any, you know, mantra or, you know, some well-known workspaces, you know,
00:18:32 kind of have this like aura about them that says you kind of have to be in our club to be part of our club, you know? And we, we want to be it's for everyone and you can do it. And, you know, we, we built our memberships. So that there's ones that are fairly inexpensive so that you can jump in,
00:18:49 even if you don't have a big budget and your company's not paying for it, but you can be part of what we're up to. What are your most common membership? Yeah. We have one that we call the flex membership and what we do is it's 10 days per month. And we don't tell you, you have to book those days in, or they don't have to be the same day.
00:19:09 So it's basically two days per week plus maybe one or two to play with. And that's, that's the, even for people who pay for different memberships, it feels like that's kind of where they ended up settling into. And that feels like the new world right now. It's like maybe one day at home, a couple of days in the coworking space and maybe one day down at the real office,
00:19:28 if they have one or, you know, they're in meetings a couple of days and they have a space to work a couple of days. And so that feels like a pretty good balance. That's the height of the bell curve. Hey, I just wanted to jump in really quickly before we continue with our discussion. If you're working on opening a co-working space,
00:19:46 I want to invite you to join me for my free masterclass three behind-the-scenes secrets to opening a coworking space. If you're working on opening a co-working space, I want to share the three decisions that I've seen successful operators make when they're creating their Coworking business. The masterclass is totally free. It's about an hour. That includes some Q and a. If you'd like to join me,
00:20:09 you can register at Everything Coworking dot com forward slash masterclass. If you already have a coworking space, I want to make sure you know, about Community Manager, University, Community Manager, University is a training and development platform for community managers. And it can be for owner-operators. It has content training resources, templates from day one to general manager. The platform includes many courses that cover the major buckets of the Community Manager role from community management,
00:20:41 operations, sales, and marketing, finance, and leadership. The content is laid out in a graduated learning path. So the Community Manager can identify what content is most relevant to them, depending on their experience and kind of jump in from there. We provide a live brand new training every single month for the Community Manager group. We also host a live Q and a call every single month so that the community managers can work through any challenges that they're having or opportunities get ideas from other community managers build their own peer network.
00:21:16 We also have a private slack group for the group. So if you're interested in learning more, you can go to Everything, Coworking dot com forward slash Community Manager. So yeah, I feel like you've kind of hit the sweet spot, which is challenging with the 10 day. Right? I used to talk about like the 10 day is such a nightmare because that's basically what everyone wants even pre-pandemic,
00:21:42 right? If you had the choice, you're probably not going to the same place every single day, but it's a tough model. You have to have enough volume lead volume and close those leads in order to make that work from a sustainability standpoint. So the density that you have probably helps that a lot. And it sounds like your point, it's hard to say exactly what it is.
00:22:08 You got it, right. You've got an offer that people in the neighborhood offer meeting, like whatever, the design, the, you know, the field, the, whatever it is, aligns with, what people are looking for. So, which is not, you know, people look at it and you worked at it out of a co-working space before.
00:22:26 And I think a lot of people start spaces and think it's really easy to reverse engineer the business. And it's like, the backend stuff is, is not that hard, but it's putting all the pieces together and getting it right. And like really aligning with what people want. Like you could just get it wrong. Yeah. We have, you know,
00:22:44 with our team now that now that we have a team and it's not just Ashley and I, you know, we have these talks and we're trying to figure out like, where do we fit? And there's this pyramid of three things. One is product is really the strong point. You're leading on product. It's the best. It's the newest, it's the coolest,
00:23:00 the other point is that you're leading on price, right? Like you're, you're going to be efficient. And, and we're going to, we're going to lead on efficiency, operational efficiency Value. Yeah. And then the third is this intimacy level, customer intimacy, like, you know, your customer and they know you and you really lean into that.
00:23:18 And it's like, you know, in, in food service product is like the five star Michelin chef, you know, the, the efficiencies, fast food. And then intimacy is like an at-home, you know, chef in your home kind of thing. Like they're making you what you want, stuff like that. And so like, you have to be in this,
00:23:35 on this map somewhere with like a day after we open. Even if we have the coolest furniture, it's not going to be the coolest anymore because someone else is going to open up with something else and they're going to have better furniture, better cooler place. We can be super efficient, but we're never going to be as efficient as the big players that have the money and things to spend on that.
00:23:53 So the only place where we can compete is in this intimacy zone. And that's what we lean into every, every week we have a team call and every time we talk about it, it's like, how do we make sure people feel valued and want to be here? In fact, we took her away terms on almost all of our memberships. We do have a few small offices and we keep kind of a one-year term on those but dedicated desks.
00:24:16 And another thing we don't have 12-month contracts. We don't have six-month contracts. We said, if you want to be here in 12 months, we would love it. And we want you to be here because you love it. Not because we've walked you into a contract. And I think there's actually data that suggests that, you know, having an end date actually prompts people to think about whether or not they're doing it.
00:24:36 And so, you know, your life of your membership life is actually longer in a no-contract scenario. Yeah. I mean, I just love everything that you said you're being super intentional. Yeah. And you're keying in really on the people aspect of it, which That's the hard part to replicate. Right? Yeah. Anybody can put in, you know,
00:24:59 fancy desks and good, good wi-fi. And a lot of the big players think that that's all it takes. And I would argue, and I think I know you would, that that's not all it takes. That's the bare minimum. Yeah. So how big is your space? So our space here is 3000 square feet. So it's our first spot.
00:25:16 Yeah. It's quite small. We maximize it though, because in London you don't waste any feet. So one thing I wish we had more of is storage. You know, we don't have enough storage, you never have enough storage, but we have a pretty nice density of use space in here. We have about a hundred, 115 total members that,
00:25:37 that use that 3000 feet. Right. That's amazing. And is your event space like dual purpose space or is that separate? It's the same. All the furniture out for events Tell from the picture I was like, is that okay? That's why it's after hours. Do you have it set up? You can move everything out. Exactly. So, yeah,
00:25:56 we, we designed it intentionally with tables on casters that flip top and there's that stack and things like that. And you do, how important is your event business to your revenue? Yeah, right now it's about 15% of our total revenue. I'd like it to be 20 to 25%, I think. Long-term. And if you think about it, you know,
00:26:18 the weekend two days out of seven it's 28% of the week when we pay rent on this building the habit seven days a week. So we need to utilize that. So I figure kind of as a proxy, we should be about 25% revenue being earned on those other times. And so that's where we're headed. Yeah. So I, yeah, I have not thought about it that way.
00:26:39 I think that's an interesting way to think about it. How do you manage there? Talk about your team. How do you manage events on the weekends with three kids at home and a dog? This may be the part that we're working to try to really figure out. But, you know, I did mention that we, we have, we live close by and so that helps.
00:26:58 I can pop over if I need to, but that's not tenable in the long term, but in terms of getting it going, that's how we've managed it. But what we do have now, we have a few team members that help that's myself, my wife, full-time in the business. And then we have a team full-time team member called Joel, who works across this site and our newer location on the other side of London,
00:27:20 but he shares his time. So he's around. And then we have a few call them ambassadors, or, you know, people who are getting probably comped on their membership to help us out in a variety of ways. But they're really the cool thing about it is, is a lot of our members they're excited to come back for things and help because they see it as part of like,
00:27:40 this is their space. This is fun. So if we have a music gig on the weekend and we say, you know, Hey, someone would mean by interested in running the bar for this music gig, people are like raising their hands and saying, yeah, I'm coming I'm in for that. I can get live music and run the bar In their neighborhood with a bunch of friends.
00:28:00 That sounds great. So that's how, you know, it's kind of, it's very like organic in that sense. And so it's worked well. We are trying to find someone part-time to help us like really manage that well so that we can get to that, you know, a little bit higher percentage and really get more of those, but just someone to be onsite and make sure things run smoothly.
00:28:17 And that things get now that we're having multiple events in the same day. Maybe that there's an easy transition between one to another. So in terms of event, across the board, music, gigs, birthday parties, whatever, it's a neighborhood space and they're not business-related events. Yeah. I mean, we, we have everything. I mean, everything from,
00:28:36 yeah. Like I said, music, gigs, we have kids parties. We've had baby showers. We've had, you know, we, we have, we've had have corporate kind of trainings. We've had corporate parties and it's kind of like whatever's around whatever people needed for. I mean, the one thing, another thing about London is space is hard to come by,
00:28:54 you know, think about hosting, you know, your five-year-old's birthday party in your thousand square foot flat, you know, with no, no garden, that's not a real exciting prospect, you know, so if it's not, and then the weather in London isn't necessarily, you can't count on it. So doing something in the park or outdoors is not always something possible.
00:29:13 So having that space and for it to be really well-designed and really attractive, I think people, you know, are excited about, you know, maybe a little more expensive than like a community center that you'd get a lot for that as well. Yup. I love it. Okay. So you mentioned a new location. Yes. So yeah, so,
00:29:31 you know, I mentioned that we were very reasonably quickly kind of recognized that we had something working and there was people coming, probably more people than we could handle. Where did the people come from? So we have walk by traffic, thankfully, you know, we're on a fairly busy street where people see what we're doing. And, and we were intentional about that in terms of having the door open and having an,
00:29:54 a board outside. We are, our building is bright blue on the outside. We were able to paint the outside. So you can see from like, what is that? And so that was really helpful, like early days. And, but now, you know, pretty much everyone that's going to walk by is walked by. I mean, you have a few people move into the area,
00:30:11 but you know, you can't depend on that forever. And so now, you know, word of mouth is probably number one. Our members tell their friends, they tell people, and then number two, this is Google maps. We've invested time in building out our profile and really playing Google's game in order to turn up on there and show people, you know,
00:30:31 I think the most common way to search for a space. If you really know you need something as you go to the map and you say co-working space near me or workspace near me, and it pops up a map and it has four or five pins and you click on each one. And so we were like, that's where we need to win. If someone clicks on our pin and it doesn't sell them,
00:30:49 then we haven't done our job well. And so we wanted to kind of express the same hospitality and intentionality that we do when you walk in the door on our page. So we have lots of photos of people and things happening, and it looks interesting and like someplace you might want to try out, I love your website by the way, which is not related to your Google maps,
00:31:09 but, and the building. And it's a website new, is that what you said? No, it's good. Yeah. We felt like the same idea. Right. We want people to get a feel A year and it, right. You get a vibe which is yeah. Still websites or like coworking space. You think they're easy. It's not that easy to keep them simple and,
00:31:30 and get the vibe and okay. So, and you don't, do you run any paid ads or Google or Facebook? We have done, we don't have any active right now. We, you know, it's kind of like early days, we were obviously running a few and we're, you know, it's hard to track. I mean, we, we did all the things to try to track where,
00:31:48 where the leads are coming from. And it's like, what are we getting for this? And so it's, you know, different things. But I feel like at this point, like if you do the right things, particularly with Google, like you don't have to pay a ton for, you know, in, in our space, we're not competing citywide.
00:32:07 And so it's like if we have the reviews and the thing and the photos, and we're keeping it updated, those things actually really play out well for you. Yep. And you're in a market where there are a lot of people who know what Coworking is been around for a long time flex, I mean, flex workspace in general. So, okay.
00:32:25 So talk about the second location. Yes. So we recognize that we had something that was working and, you know, at the same time, like we are in a neighborhood, so there's, there's not like expansion opportunity. Like we're not to be 30,000 square feet and the neighborhood and make that make sense. So we really needed to think outside of that and where can we be elsewhere in London?
00:32:47 And thankfully in this case, you know, we were looking around and, and our landlord at our current space came to us and said, we have another building. Would you be interested in, in going into this building? And I actually went and looked and then turned him down. I said, it doesn't really, I don't know if we're ready for that.
00:33:05 Thanks for nothing. And then a few months later, they came back and said, we think you should look again, you know, would you be willing to do a management agreement on this one? And we said, well, let's talk about it. Let's look at it. And so at this point, some things that they had done some things and helped fill out other parts of the building.
00:33:23 And, and there was, and then now all of a sudden, you know, my level of risk is, is lowered. And it felt like the right opportunity to go ahead and open the next bite. And so we took the tack of, instead of building a unified brand across all of the sites that each neighborhood was unique, each individual is unique.
00:33:42 And so all of our sites are kind of white label independently branded. And so we're doing the hard thing on purpose because we think it matters to really intentionally be a part of a specific community and a place in that community. So our second site is called groundwork's instant Chizik and the west part of London. And so it's got a very different design, I mean,
00:34:04 not very different, it's a different designs in a different kind of building. And so it takes on its own life and exists in its own way. And so, so that was fun. And it's been, it's been really exciting to kind of replicate, to do things again, to think through furniture again and say, okay, what did we learn in the first one?
00:34:21 And how do we do that this way? And, you know, I think we've really validated a lot of our initial decisions that luck or otherwise we made a lot of the right ones. And so we, we kind of did the same things again, largely, but then we got, you know, the cool thing about doing unique sites and not having to be stuck on a single brand was we can try new things.
00:34:41 And we say, you know, what, if we did it like this, what if we tried this way, we could do different pricing. We could do different membership tiers and find out, you know, we can do little like AB tests and say, is this work or is this work? And, and so that's been really fun. You know,
00:34:55 my favorite part of businesses is the creation stage. And so I've kind of created a scenario where I get to keep creating, every time we open a new site, it's like a brand new business, which is fun for me. Maybe it gives me more gray hair, but it's the fun part, I think. And so that's been, it's been great.
00:35:11 We opened it in February this year. And so we're about six months then we've got good traction and we're working to fill those offices over there at which, which led me to the conversation that we've had a lot more success with flex desks at both sites than we have with more fixed kind of basis. So how many square feet is the new space and how many offices?
00:35:34 Yeah, the new space is a bit bigger. It's 3,500 feet kind of in our demise. And then we kind of have some shared space that we kind of just, co-opt where there's more flexible seating. That's not really ours, but it's kind of no, one's either. So it works. How many offices? Oh, yeah. That one's got,
00:35:51 we went heavier on offices there because we thought, or I thought that the space, the part of the city made more sense for that. And there was not, as you know, it's not right off the street, the way ours is here. So we would get more that kind of, we have to pin and offices and that site, they're all two desks to five desks.
00:36:11 So very small. Oh, but still not individuals, five people in them. Yeah. Yeah. That may be the thing because you're looking for neighborhood people who yeah, who have a five-person company. Yeah. So yeah, small teams and, you know, some of our T desks we sold as singles just to get a little space and they're happy to pay for it,
00:36:38 but yeah. Like small teams are a little harder to find, I think in that scenario. And I think that's part of it, but the good thing is they're really sticky once they're in. Yeah. Right. Exactly. If they, if that's where they live or that's where the yeah, exactly. Interesting. And then just high level, you don't have to share all the details,
00:36:54 but structure with the landlord. Is It her, Or did he pay, did you have to do construction? So they covered the CapEx on the fit-out and then we have a, basically a profit share on after operations costs and it leans in their favor early because they put in all the money, but then when you get the upside, if we do our job well.
00:37:17 Yep. And so the flex desk there are, that are moving. Yeah. There's sound. And it's something that we thought we'd have more trouble selling those, just given the location, the part of the city that it's in, it's not as busy on the street as our other side and some other places. And so we thought, you know, it might be harder to find people who were just like wanting to walk in and work,
00:37:41 but we have good traction on that and people are excited about it. I mean, it's, it looks great. It's really attractive space. So I'm not surprised in that sense, but I guess it's just on the, on the ratio, I thought we'd be a little quicker to fill up some of those other spaces given, given, Instead of just the size of offices.
00:37:55 I bet. If you had 10, one-person offices, they'd probably do it. Yeah. I don't know. That's financially viable. Have you figured it out? How to, how to build one-person offices that don't blow the budget. Right. I mean, that's the big trade-off and that's why sometimes the management agreement will work. If the landlord has a long enough sort of view on,
00:38:18 you know, their return doing it on a lease is just hard. So yeah. It's usually people who own the building or doing a management agreement to put it in the one office. Totally get it and try to get there. Or you might have, you tried the, sell the office to find people who don't know each other, but like, yeah.
00:38:35 Yeah. I think that's, you know, we're holding off a little bit on that. Dixie's I think in time we'll find the people, but we are doing a decent bit of like day office rate that will, we will just hire it out like a meeting room or, or something else. And we're getting some traction on that. So it's, it's good for cashflow in the near term until we get it,
00:38:55 we get sold long-term. And how do you do on meeting rooms in neighborhood location? Yes, Really well, actually I think the, we have a lot of use from our members because, you know, if they're mostly flexed, if they have a client or, you know, have a long call or something, they'll book a meeting room and we give them some credit,
00:39:14 but they are generally, we have people that pay extra to go over that and they just build it into their, their cost for the month. We have a lot of, you know, there are some other offices in the area, but a lot of them, you know, maybe they don't have their own meeting space or, you know, we have other kind of like retail-focused businesses that don't have meeting space,
00:39:35 then they can come use it on like, there's a salon that does interviews and stuff in the meeting room. Instead I can just walk down the street, have their interview or the meeting or whatever. And then go back. We have a restaurant that uses it in similar way across the road. So those kinds of things are, have been valuable. And then we have,
00:39:52 you know, the people who are like, I work from home all the time. I don't need a place to work, but I don't want to bring a client to my house. Right. So they want to, and they don't want to necessarily meet you at a restaurant or a cafe. Cause it's a little too unprofessional. They'll book, a meeting room for,
00:40:07 you know, sometimes a day sometimes, you know, just a few hours, those kinds of things have, have created good, good traction on meeting rooms and it's, it's been well. That's awesome. Cause I wondered if events would do well, but meeting rooms, maybe not just with the neighborhood. So Yeah, I think it's a mix of our client base.
00:40:26 You know, I think a lot of coworking spaces could probably say this. I mean we lean and creative. We have a nicely designed kind of creative-looking space. It actually used to be a recording studio. So it's got some lots of exposed brick and you know, fun things. And so people want to be here. And so, you know,
00:40:44 we have like everything from like regular graphic designers and designers, we have fashion, we have lots of media, you know, journalists, podcasters, film, you know, other PR marketing kind of all your standard ones that work from a laptop can do anywhere. But then we've gotten, you know, your proper remote workers that we like to say, you know,
00:41:05 we are creative or people who want to be creative, you know, even if they're an accountant or, you know, they work for Amazon or something like that. And we have these remote workers that do things that you wouldn't necessarily expect. And yet they embrace it just as much as everyone else Uncreative people who want to be surrounded by you or everybody is creative in their own way.
00:41:25 That's all right. I mean, I would consider myself in that category. Right. Like I don't do any of those like really creative things. I like to make stuff up and figure out new ways. You’re creating space. You're creating community. Like you're a creator. Totally. How do you handle phone calls? You're in a phone booth. Yeah. That's right. You know,
00:41:45 you can never have enough phone booths. It's kind of like induced demand. You add another lane to the freeway. There's going to be cars that fill it out right up. So if we had 10 phone boosts, they would all be full all the time. And we wouldn't have anyone sitting in the open space. So it's just a balance of saying,
00:42:02 you know, we have some and we want you to use them. We have little, very friendly signs that say, try to keep your time to an hour and then get out. But that works well. But we also don't have a, we don't have any rules against taking phone calls. We just kind of look at people and say, you know,
00:42:17 just be considerate. You know, if you want to take, if you need to take the phone, call in the space, like more than welcome to ultimately, if you have two people on the phone, they kind of cancel each other out. There's one person, everything else is quiet. Right. The distracting part about a phone call is listening to one side of someone else's.
00:42:37 But if you're both on the phone, it doesn't matter. Yeah. It doesn't matter. So, so, you know, we just say, you know, if someone gives you the stink eye, because you're being too loud, then take the hint and go find another place. But if not, like carry on, like we're all doing business here.
00:42:52 We know what we're here for. And then I think it goes back into the way we kind of manage the space. It's like, look, we're not, we don't have a bunch of rules and a bunch of things that say, don't do this, do this, stand here, don't stand here. But it's just sort of like be a decent human and we'll all get along.
00:43:08 And you know, if that resonates with people, then they want to be part of it. If it doesn't resonate, you know, they can go find a place that does. And that's great. Right. We know who we are and we're not trying to be something else, Which is also hard. I mean, I think it's hard when you're first opening.
00:43:24 I see people struggle with that because you know, when you're waiting for people to show up, you know, or even doing your second, like there's a lot of time to question, are we doing this right? Are we doing the right thing? Right. So and to be for something is so much more compelling than not, but it feels risky,
00:43:43 Right? Yeah. I think we go back to that all the time. It's like, what are we actually here for? But what are we trying to do? And does this help us do that? We believe that the community aspect is really why we do this. We want people to connect in real life. I mean, this has taken on even more significance since COVID like connecting over FaceTime is great to carry on a relationship,
00:44:05 hard to build a new relationship on zoom and on, on this screen. But even to carry on after a period of time, it's like we need to see each other. And so we want to facilitate those interactions, those kind of chance, you know, water cooler moments, if you will. And so we think about everything is like, are we actually helping that right now?
00:44:24 Or is this decision like if we get more phones, does that actually help us accomplish this goal? And it's like, no, it actually doesn't. So we're going to have a certain number and no more now having space is another limiter on that. But even if we had it, I think we would limit it at some point. And then, you know,
00:44:40 do we have a bunch of little desks with dividers between them? You know, COVID was actually really hard because we were like putting up plastic barriers is the antithesis of what we're trying to accomplish. So how do we do this in a way that makes people feel safe and actually does give us the kind of protection that we need, but continues to facilitate the kind of human connection that we're trying to do.
00:45:03 And, and so we had to invent basically a new, you know, divider system in our desk area that was just high enough to be here, but you can still see over it, it absorbs this much sound, but it allows you to see each other and these kinds of things. And so it was like, I just had to kind of draw that on my napkin and decide,
00:45:20 this is how it's going to be. Can we get it built and do that? So yeah, it's knowing who you are and really sticking to it and saying, this is what we believe is the right thing and going for it full on. And I think you end up finding a people resonate. They want it, they want that. And so you know it and they appreciate that you stuck to it,
00:45:40 you know, and say, yes, this is what I've been looking for. You know? And, and some people don't get it and that's fine because you're not trying to, every one of my favorite things about this business is like I have a hundred, 115 memberships available. I don't even know there's 20,000 people in a square mile, so I don't have to win everyone.
00:46:01 I need the right 100, 115 people. And if they love what we're doing and we love them, then all of us are going to be happy. The business is going to work and we're going to have a great time. I love it. So you just opened your second location. What's next? What's the next couple of years old. Yeah.
00:46:22 I mean, none of us really know. Right. But we do have a third that's kind of in the works, which is exciting again in London, kind of a different part. We'll have east-west and kind of the north, which is nice to try it and swung and missed on the south, south island and location a couple of times. So we'll keep working on that.
00:46:40 But yeah, I think for us, the way we want to do business, we need really good partners in terms of like property owners. Like, you know, we're not going to take a traditional lease. It's just, doesn't make sense in our business model. And then we've got, I've gotten really good at sharing. You know, my kind of finance real estate background has now helped.
00:47:01 I can, I can show them the numbers and say like it does not have And how to position it in your language. Yeah. I can say, you know, the, the IRR on this for me, doesn't make sense. Like I'm never going to pay that. And I'm like, but on your side, you can actually see the return on this.
00:47:18 If we do what we do. And now I can show that we can, because we've got multiple examples, you can get the return that you need. The cashflow is near term and the asset depreciation on the longer term, and we help you sell the other units or whatever else you're doing and that is compelling to those people. So we want people that get it that want,
00:47:36 then understand our model and understand, you know, we're not about just maximizing number of desks that gets sold, but we are about really doing that community piece. And that we think if we do that, well, it will result in sold desk because they want to be there. But that's not the thing that we lead with this, you know, we're not here to sell desk people.
00:47:54 We're here to invite people into a community, into a thing that they want to be part of. And just so happens that they sit in a desk while they're here. Well, your original landlord was pretty persistent about getting you into a second location. So, but that says a lot for him also, I'm assuming that, you know, he saw what you were doing and he wanted to replicate that.
00:48:15 And I think, you know, landlords are people too, right. And he probably feels proud that he's, you know, in a, in an indirect way, making that kind of impact in a community where he owns. Yeah. So, you know, whether it's, whether it's a profit motive or a more optimistic goal, like the beauty of it is I think if we do well,
00:48:35 if we do what we intend to do, like it can be both like, this is not a zero-sum one or the other kind of game. I think we can do both really good, really valuable community-type work and return a market rate or better kind of return to us and to the property owner Was your first location, Elise. It was,
00:48:58 you have the traditional lease. It was kind of, you know, moving from overseas, no history, no background. So we took a flyer and I'll fully admit we overpay, like it's too expensive, but you know, we're hoping that this relationship grows and we can come back to the table and be able to show them the other value that we had and,
00:49:18 and get a, get a longer-term solution. But, you know, if it's sort of a, I hate to use the term loss leader, but in some sense, that's how we've had to think about it. It's like, we know we're not getting the margins we would like to get here, but we had to establish something in order to do this well.
00:49:32 Yep. So I could talk forever. You have other commitments today. I have a puppy that's going to need to go out. I have to say, I've been super inspired by this conversation. I just feel like I love how intentional you are and how thoughtful you are. I think that my audience is really going to enjoy this. So I’m so glad you responded to that email and said,
00:49:54 you know, talk about the flex desks and the, you know, I'm glad. Thank you for doing that. Thanks for having me. Yeah. Yeah. We'll have to do it again. I wanna, you know, I want an update in a year or so. Perfect. Okay. Right now we'll come back. Totally awesome. Thanks David.
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