Infuriating article on the "high premiums" charged by coworking spaces in Bloomberg

Jerome · February 9, 2015, 4:20pm

"In my analysis of the article I tried to be objective, impartial. (I don’t get which “great deal” I’ve missed, but no worries there.)”

The “great deal[s]” you’ve missed are:

overestimated # of memberships

overestimated take-home pay of $5k, or 25%

wrong math of $100k/year…should be $60k/year

your implication that a lease, supplies, etc. is below $15k/mo.

any implication that private business owners in a risky venture should subsidize or give away free plans for the sake of the “social economy”. Don’t confuse socialism and social economy.

I suspect you think the “some who get rich” include WeWork. WeWork is barely a coworking space. For a while, they readily admitted they weren’t coworking, which makes sense. They’re exec suites who have much more hip marketing and design. But whatever they are, kudos for them for figuring out a success that’s appropriate for them. Seriously, the rest of us are HAPPY they’re getting all this attention [or hype].

your original contradiction - which you now say you’ve corrected - about one’s not charging below cost vs. free plans

"still some information, albeit partial, is of interest and, well, true”

“some…partial” is absolutely an overestimate, because most of the article was factually, and therefore idiotically wrong.

So pretty much the “great deal” you missed amounts to the same “great deal [of inaccuracy]” of that article.

JEROME CHANG

WEST: Santa Monica
1450 2nd Street (@Broadway) | Santa Monica CA 90401
ph: (310) 526-2255

CENTRAL: Mid-Wilshire
5405 Wilshire Blvd (2 blocks west of La Brea) | Los Angeles CA 90036
ph: (323) 330-9505

EAST: Downtown
529 S. Broadway, Suite 4000 (@Pershing Square) | Los Angeles CA 90013
ph: (213) 550-2235

···

On Feb 9, 2015, at 7:51 AM, Will Bennis, Locus Workspace [email protected] wrote:

Hi Marius,

I hear your sarcasm so hesitate to reply, but you seem to be sincerely missing the key point: After operating costs, a space like that could easily be running at a net loss without paying the owner a penny. The idea that the average owner of a space with that capacity is taking 25% of revenue as salary is just naive.

But, even taking your numbers as correct, if the owner was taking $5000 as profit / month, that’s $60,000 / year, not $100,000 / year. And yes, I would guess most people running coworking spaces in bigger cities(in the USD market) have backgrounds that could earn them more than $60,000 / year as employees, without the risk involved with running a coworking space.

Best,

Will

On Monday, February 9, 2015 at 4:38:48 PM UTC+1, Marius Amado-Alves wrote:

Thanks for more first hand information.

/*
Personally I found this part particularly interesting.

“Even if you’re talking about a space that has 100 full-time members at $200 per member in a big city, you are very likely not looking at a coworking space where the owners are making what they could make as an employee, given their level of expertise.”

I cannot help wonder which expertise might that be. I had the impression cowork owners have all kinds of backgrounds. Say a big city cowork owner cuts $5000 for themselves from the $20000+ cake, 100k per annum. They’re missing out on what, a 200k annum job? What jobs are those? CEO, CTO, CFO, VP? Wow, I had no idea owners came from these positions.
*/

In my analysis of the article I tried to be objective, impartial. (I don’t get which “great deal” I’ve missed, but no worries there.)

Maybe the fuel of this discussion is the relatively infrequent negative reviews of coworking. We’ve all seen lots of articles praising the unending niceties of the “new way to work.” Many such articles are also sensationalist and lacking. This negative article touches some points that are seldom addressed in the positive ones, but still some information, albeit partial, is of interest and, well, true. Same as in the positive reviews.

All this is still new and a comprehensive view is still building–but it must integrate the good as the bad.
Finally, this is probably just philosophy and maybe off topic so please feel totally free to just ignore me.

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Marius_Amado-Alves · February 9, 2015, 5:18pm

Oops, sorry about the bad math (the vision of the “2” and the “5” there took over the “12” not there)

I kind of stand by my non-numerical opinions, but no big issue, just philosophy in very early state, it’s a long way to the truth, and you guys are incredibly helpful, thanks.

As said opinions are a bit counter the usual praise of coworking they’re bound to be provocative here, yes, but not sarcastic as such, hope you believe that, I don’t want to be recalled as the sarcastic guy here, please.

Ok I see now some owners have quit their 100k+ jobs to go develop coworking. Good.

Thanks.

M.E_Ralph · February 9, 2015, 5:45pm

Right on, Aaron!

···

On Sun, Feb 8, 2015 at 12:06 AM, Aaron Cruikshank [email protected] wrote:

I want to respond to this directly because I have been involved in running and setting up both non-profit and for-profit coworking spaces. The social economy does not equal giving things away for below cost. A social enterprise still needs to operate as a business entity - just one that puts profits behind delivering a good service.

Unless you own the building or are subsidized/bankrolled by some wealthy folks, your operating costs are driven by the market. Commercial real estate for those of us who lease space is both a supplier and a direct competitor at some level.

We are not greedy, soulless bastards who fall asleep in a pile of money surrounded by naked women. We work hard to provide a good service to a community - usually at not much above our costs. Very few people are getting rich in this business.

As for those not able to afford coworking, at the HiVE, I always allocated a number of desks (usually 5% of the total desks) that I could give away for free or next to free for groups in need. Usually charities or non-profits doing a lot of social good. That’s how I helped people in tough situations.

Do I feel like not giving the starving artist a free desk somehow means that I have lost my way? Fuck no. Coworking is a privilege, not a right. I’m not the social safety net. I have to build communities that will thrive and grow and create impact in the community.

Unemployed people have many resources available to them in my country - that is paid for by the taxes I pay and my tenants pay. I do not need to provide a free service to them.

Should we give a free pickup truck and lawnmower to the person who is unemployed and wants to start a gardening business? Most people would say that is ludicrous but you’re suggesting I do the same thing by 100% subsidizing overhead costs for someone trying to make a living as a creative class professional. Why should I do that?

/rant

Aaron Cruikshank

Principal, CRUIKSHANK

Phone: 778.908.4560

email: [email protected]

web: cruikshank.me

twitter: @cruikshank

book a meeting: doodle.com/cruikshank

linkedin: linkedin.com/in/cruikshank

On Feb 7, 2015 12:37 PM, “Marius Amado-Alves” [email protected] wrote:

Not read the article, but I do feel cowork fees are “too high” in a couple contexts:

space with hundreds of coworkers in a big city e.g. Berlin thus earning many tens of thousands of euros monthly; that’s very good business for the owner, but somehow inbalanced w.r.t. to the social economy spirit of coworking

many people would benefit from coworking but cannot afford the high fees e.g. unemployed people

this is just an observation about the dimension of the fees, not about the article which I haven’t read and probaly will not, sorry

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Oren.S · February 9, 2015, 9:00pm

I find it sad that this discussion of whether or not coworking is worth it is now based on shallow quantitative analysis of coworking’s profitability.

Marius is more off-base with his accusations than his numbers. As far as I understand it, his grievances with coworking are: 1. Coworking is too expensive for the common man who needs it. 2. Coworking space operators are getting rich by charging excessively. 3. People on this thread have real experiences not based in conjecture and are willing to do actual research (like reading the article in the OP)

As others have stated, the market determines prices. Find me a more inexpensive option for the independent worker and I’ll believe you coworking is overpriced.

Furthermore, free or discounted coworking HELPS NO ONE IN THE LONG RUN, not even the coworker. If the coworker has to rely on the benevolence or patronage of another individual to make their workplace sustainable, they have lost their workplace independence and interdependence on each other to share the space. They are instead, much like a factory employee or unemployed citizen on the dole, dependent on some third party to provide things for them.

The common man has banded together to create coworking and is working very hard to sustain it. As far as I know, coworking is priced very affordably for an independent professional in every city. You cannot isolate a location like NYC, SF, Tokyo, or London and extrapolate its prices to the rest of the world. If it was too expensive for the local population, it would go out of business (as many coworking spaces do). Just like all other markets, a FAIR PRICE (determined by supply/demand) is reached through equilibrium. The barrier to entry is way too low to enforce any local oligopoly.

No one on this thread (save for maybe Jerome ) has built an empire or made a fortune in coworking. This is a ridiculous conclusion from the misinformation Marius has accumulated in 1 above. Not even going to address this further.
You are not the first nor the last person to judge coworking from afar. Just curious Marius, how much time have you spent in a coworking space? Are you a proud member of your coworking community? You don’t have to be an owner/operator to enjoy the benefits of coworking. In my experience, the owner/operator role is actually the least desirable in the community because it carries so much more obligation and duty than any other member.

Free from those obligations, have you found people you can collaborate with? Have you found coworkers that inspire you and challenge you when you need feedback on a project? Have you found coworkers you can’t wait to dedicate your weekend to helping? Have you found coworkers that you can’t wait till happy hour to grab a beer with? Until you’ve experienced the sense of belonging in a coworking community, I don’t think any amount of shitty math can justify 1 Euro a month.

The real story has nothing to do with the above. The poorly understood economics of profitability for a coworking space should have little influence on someone looking to join a space. The things that should matter are:

Does this space have the necessary features for me to do work here?
Is the space and community an environment that empowers and motivates me?
Are these the people I want to spend my waking hours around?
Are my membership dues a fair exchange for the benefits received above?

The irony of this whole discussion to me is that no one has ever not joined Fort Work as a result of the inability to pay. Granted, we are priced very competitively for our market, but I don’t think that’s why. More common that not, members are actually suspicious of the low cost and have on more than one occasion questioned the financial viability of the space if we did not RAISE RATES. Yes, I have members come up to me and tell me they feel uncomfortable about the low costs and felt they owed more.

Many others have said that placing a price on coworking is actually impossible because the value is not collected upfront. I think they correctly realize that coworking in its very nature is not transactional, but about forming relationships.

Thus from a relationship viewpoint, I think this argument can be redeveloped for any relationship, a classic example being the cost comparison between a whore and a wife, or on doing your own taxes vs hiring an accountant, etc. In the end, one can’t put a price on a relationship, not because it won’t be quantified, but because the numbers betray the story of what a relationship is all about.

···

On Monday, February 9, 2015 at 11:18:55 AM UTC-6, Marius Amado-Alves wrote:

Oops, sorry about the bad math (the vision of the “2” and the “5” there took over the “12” not there)

I kind of stand by my non-numerical opinions, but no big issue, just philosophy in very early state, it’s a long way to the truth, and you guys are incredibly helpful, thanks.

As said opinions are a bit counter the usual praise of coworking they’re bound to be provocative here, yes, but not sarcastic as such, hope you believe that, I don’t want to be recalled as the sarcastic guy here, please.

Ok I see now some owners have quit their 100k+ jobs to go develop coworking. Good.

Thanks.

Joel3 · February 10, 2015, 2:14am

Oren- +10. Thanks for clearly articulating the hard work (and joy) of being an owner/operator. As one myself, I have yet to meet anyone who has started a space to “make crazy money” who was still with it for very long.

I also think it is fine for us to reinforce that coworking is not for everyone, and for those that think that the benefits they get from it (collaboration, connectedness, community, etc.) aren’t worth the price then it’s ok for us to bless and release them. Many others will step quickly into the void they left because those things are well worth every penny paid. Blessings to all the owners/operators/community members that drive that value just by being their awesome selves.

Joel Bennett

Veel Hoeden Coworking

···

On Mon, Feb 9, 2015 at 3:00 PM, [email protected] [email protected] wrote:

I find it sad that this discussion of whether or not coworking is worth it is now based on shallow quantitative analysis of coworking’s profitability.

Marius is more off-base with his accusations than his numbers. As far as I understand it, his grievances with coworking are: 1. Coworking is too expensive for the common man who needs it. 2. Coworking space operators are getting rich by charging excessively. 3. People on this thread have real experiences not based in conjecture and are willing to do actual research (like reading the article in the OP)

As others have stated, the market determines prices. Find me a more inexpensive option for the independent worker and I’ll believe you coworking is overpriced.

Furthermore, free or discounted coworking HELPS NO ONE IN THE LONG RUN, not even the coworker. If the coworker has to rely on the benevolence or patronage of another individual to make their workplace sustainable, they have lost their workplace independence and interdependence on each other to share the space. They are instead, much like a factory employee or unemployed citizen on the dole, dependent on some third party to provide things for them.

The common man has banded together to create coworking and is working very hard to sustain it. As far as I know, coworking is priced very affordably for an independent professional in every city. You cannot isolate a location like NYC, SF, Tokyo, or London and extrapolate its prices to the rest of the world. If it was too expensive for the local population, it would go out of business (as many coworking spaces do). Just like all other markets, a FAIR PRICE (determined by supply/demand) is reached through equilibrium. The barrier to entry is way too low to enforce any local oligopoly.

No one on this thread (save for maybe Jerome ) has built an empire or made a fortune in coworking. This is a ridiculous conclusion from the misinformation Marius has accumulated in 1 above. Not even going to address this further.

You are not the first nor the last person to judge coworking from afar. Just curious Marius, how much time have you spent in a coworking space? Are you a proud member of your coworking community? You don’t have to be an owner/operator to enjoy the benefits of coworking. In my experience, the owner/operator role is actually the least desirable in the community because it carries so much more obligation and duty than any other member.

Free from those obligations, have you found people you can collaborate with? Have you found coworkers that inspire you and challenge you when you need feedback on a project? Have you found coworkers you can’t wait to dedicate your weekend to helping? Have you found coworkers that you can’t wait till happy hour to grab a beer with? Until you’ve experienced the sense of belonging in a coworking community, I don’t think any amount of shitty math can justify 1 Euro a month.

The real story has nothing to do with the above. The poorly understood economics of profitability for a coworking space should have little influence on someone looking to join a space. The things that should matter are:

Does this space have the necessary features for me to do work here?

Is the space and community an environment that empowers and motivates me?

Are these the people I want to spend my waking hours around?

Are my membership dues a fair exchange for the benefits received above?

The irony of this whole discussion to me is that no one has ever not joined Fort Work as a result of the inability to pay. Granted, we are priced very competitively for our market, but I don’t think that’s why. More common that not, members are actually suspicious of the low cost and have on more than one occasion questioned the financial viability of the space if we did not RAISE RATES. Yes, I have members come up to me and tell me they feel uncomfortable about the low costs and felt they owed more.

Many others have said that placing a price on coworking is actually impossible because the value is not collected upfront. I think they correctly realize that coworking in its very nature is not transactional, but about forming relationships.

Thus from a relationship viewpoint, I think this argument can be redeveloped for any relationship, a classic example being the cost comparison between a whore and a wife, or on doing your own taxes vs hiring an accountant, etc. In the end, one can’t put a price on a relationship, not because it won’t be quantified, but because the numbers betray the story of what a relationship is all about.

On Monday, February 9, 2015 at 11:18:55 AM UTC-6, Marius Amado-Alves wrote:

Oops, sorry about the bad math (the vision of the “2” and the “5” there took over the “12” not there)

I kind of stand by my non-numerical opinions, but no big issue, just philosophy in very early state, it’s a long way to the truth, and you guys are incredibly helpful, thanks.

As said opinions are a bit counter the usual praise of coworking they’re bound to be provocative here, yes, but not sarcastic as such, hope you believe that, I don’t want to be recalled as the sarcastic guy here, please.

Ok I see now some owners have quit their 100k+ jobs to go develop coworking. Good.

Thanks.

–

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