Jan
26
2021
--

How Atlanta’s Calendly turned a scheduling nightmare into a $3B startup

One big theme in tech right now is the rise of services to help us keep working through lockdowns, office closures, and other Covid-19 restrictions. The “future of work” — cloud services, communications, productivity apps — has become “the way we work now.” And companies that have identified ways to help with this are seeing a boom.

Today comes news from a startup that has been a part of that trend: Calendly, a popular cloud-based service that people use to set up and confirm meeting times with others, has closed an investment of $350 million from OpenView Venture Partners and Iconiq.

The funding round includes both primary and secondary money (slightly more of the latter than the former, from what I understand) and values the Atlanta-based startup at over $3 billion.

Not bad for a company that before now had raised just $550,000, including the life savings of the founder and CEO, Tope Awotona, to initially get off the ground.

Calendly is a freemium software-as-a-service, built around what is essentially a very simple piece of functionality.

It’s a platform that provides a quick way to manage open spaces in your calendar for people to book appointments with you in those spaces, which then also books out the time in calendars like Google’s or Microsoft Outlook — with a growing number of tools to enhance that experience, including the ability to pay for a service in the event that your appointment is not a business meeting but, say, a yoga class. Pricing ranges from free (one calendar/one user/one event) to premium ($8/month) and pro ($12/month) for more calendars, events, integrations and features, with bigger packages for enterprises also available.

Its growth, meanwhile, has to date been based mostly around a very organic strategy: Calendly invites become links to Calendly itself, so people who use it and like it can (and do) start to use it, too.

The wide range of its use cases, and the virality of that growth strategy, have been winners. Calendly is already profitable, and it has been for years. And more recently, it has seen a boost, specifically in the last twelve months, as new Calendly users have emerged, as a result of how we are living.

We may not be doing more traditional “business meetings” per week, but the number of meetings we now need to set up, has gone up.

All of the serendipitous and impromptu encounters we used to have around an office, or a neighborhood coffee shop, or the park? Those are now scheduled. Teachers and students meeting for a remote lesson? Those also need invitations for online meetings.

And so do sessions with therapists, virtual dinner parties, and even (where they can still happen) in-person meetings, which are often now happening with more timed precision and more record-keeping, to keep social distancing and potential contact tracing in better order.

Currently, some 10 million of us are using Calendly for all of this on a monthly basis, with that number growing 1,180% last year. The army of business users from companies like Twilio, Zoom, and UCSF has been joined by teachers, contractors, entrepreneurs, and freelancers, the company says.

The company last year made about $70 million annually in subscription revenues from its SaaS-based business model and seems confident that its aggregated revenues will not long from now get to $1 billion.

So while the secondary funding is going towards giving liquidity to existing investors and early employees, Awotona said the plan will be to use the primary capital to invest in the company’s business.

That will include building out its platform with more tools and integrations — it started with and still has a substantial R&D operation in Kiev, Ukraine — expanding its operations with more talent (it currently has around 200 employees and plans to double headcount), further business development and more.

Two notable moves on that front are also being announced with the funding: Jeff Diana is coming on as chief people officer with a mission to double the company’s employee base. And Patrick Moran — formerly of Quip and New Relic — is joing as Calendly’s first chief revenue officer. Notably, both are based in San Francisco — not Atlanta.

That focus for building in San Francisco is already a big change for Calendly. The startup, which is going on eight years old, has been somewhat off the radar for years.

That is in part due to the fact that it raised very little money up to now (just $550,000 from a handful of investors that include OpenView, Atlanta Ventures, IncWell and Greenspring Associates).

It’s also based in Atlanta, an increasingly notable city for technology startups and other companies but more often than not short on being credited for its heft in that department (SalesLoft, Amex-acquired Kabbage, OneTrust, Bakkt, and many others are based there, with others like Mailchimp also not too far away).

And perhaps most of all, proactively courting publicity did not appear to be part of Calendly’s growth playbook.

In fact, Calendly might have closed this big round quietly and continued to get on with business, were it not for a short Tweet last autumn that signaled the company raising money and shaping up to be a quiet giant.

“The company’s capital efficiency and what @TopeAwotona has built deserve way more credit than they get,” it read. “Perhaps this will start to change that recognition.”

After that short note on Twitter — flagged on TechCrunch’s internal message board — I made a guess at Awotona’s email, sent a note introducing myself, and waited to see if I would get a reply.

I eventually did get a response, in the form of a short note agreeing to chat, with a Calendly link (naturally) to choose a time.

(Thanks, unnamed TC writer, for never writing about Calendly when Tope originally pitched you years ago: you may have whet his appetite to respond to me.)

In that first chat over Zoom, Awotona was nothing short of wary.

After years of little or no attention, he was getting cold-contacted by me and it seems others, all of us suddenly interested in him and his company.

“It’s been the bane of my life,” he said to me with a laugh about the calls he’s been getting.

Part of me thinks it’s because it can be hard and distracting to balance responding to people, but it’s also because he works hard, and has always worked hard, so doesn’t understand what the new fuss is about.

A lot of those calls have been from would-be investors.

“It’s been exorbitant, the amount of interest Calendly has been getting, from backers of all shapes and sizes,” Blake Bartlett, a partner at OpenView, said to me in an interview.

From what I understand, it’s had inbound interest from a number of strategic tech companies, as well as a long list of financial investors. That process eventually whittled down to just two backers, OpenView and Iconiq.

From Lagos to fixing cash registers

Yet even putting the rumors of the funding to one side, Calendly and Awotona himself have been a remarkable story up to now, one that champions immigrants as well as startup grit.

Tope comes from Lagos, Nigeria, part of a large, middle class household. His mother had been the chief pharmacist for the Nigerian Central Bank, his father worked for Unilever.

The family may have been comfortable, but growing up in Lagos, a city riven by economic disparity and crime, brought its share of tragedies. When he was 12, Awotona’s father was murdered in front of him during a carjacking. The family moved to the U.S. some time after that, and since then his mother has also passed away.

A bright student who actually finished high school at 15, Awotona cut his teeth in the world of business first by studying it — his major at the University of Georgia was management information systems — and then working in it, with jobs after college including periods at IBM and EMC.

But it seems Awotona was also an entrepreneur at heart — if one that initially was not prepared for the steps he needed to take to get something off the ground.

He told me a story about what he describes as his “first foray into business” at age 18, which involved devising and patenting a new feature for cash registers, so that they could use optical character recognition recognize which bills and change were being used for, and dispense the right amount a customer might need in return after paying.

At the time, he was working at a pharmacy while studying and saw how often the change in the cash registers didn’t add up correctly, and his was his idea for how to fix it.

He cold-contacted the leading cash register company at the time, NCR, with his idea. NCR was interested, offering to send him up to Ohio, where it was headquartered then, to pitch the idea to the company directly, and maybe sell the patent in the process. Awotona, however, froze.

“I was blown away,” he said, but also too surprised at how quickly things escalated. He turned down the offer, and ultimately let his patent application lapse. (Computer-vision-based scanning systems and automatic dispensers are, of course, a basic part nowadays of self-checkout systems, for those times when people pay in cash.)

There were several other entrepreneurial attempts, none particularly successful and at times quite frustrating because of the grunt work involved just to speak to people, before his businesses themselves could even be considered.

Eventually, it was the grunt work that then started to catch Awotona’s attention.

“What led me to create a scheduling product” — Awotona said, clear not to describe it as a calendaring service — “was my personal need. At the time wasn’t looking to start a business. I just was trying to schedule a meeting, but it took way too many emails to get it done, and I became frustrated.

“I decided that I was going to look for scheduling products that existed on the market that I could sign up for,” he continued, “but the problem I was facing at the time was I was trying to arrange a meeting with, you know, 10 or 20 people. I was just looking for an easy way for us to easily share our availability and, you know, easily find a time that works for everybody.”

He said he couldn’t really see anything that worked the way he wanted — the products either needed you to commit to a subscription right away (Calendly is freemium) or were geared at specific verticals such as beauty salons. All that eventually led to a recognition, he said, “that there was a big opportunity to solve that problem.”

The building of the startup was partly done with engineers in Kiev — a drama in itself that pivoted at times on the political situation at times in Ukraine (you can read a great unfolding of that story here).

Awotona says that he admired the new guard of cloud-based services like Dropbox and decided that he wanted Calendly to be built using “the Dropbox approach” — something that could be adopted and adapted by different kinds of users and usages.

Simplicity in the frontend, strategy at the backend

On the surface, there is a simplicity to the company’s product: it’s basically about finding a time for two parties to meet. Awotona notes that behind the scenes the scheduling help Calendly provides is the key to what it might develop next.

For example, there are now tools to help people prepare for meetings — specifically features like being able to, say, pay for something that’s been scheduled on Calendly in order to register. A future focus could well be more tools for following up on those meetings, and more ways to help people plan recurring individual or group events.

One area where it seems Calendly does not want to dabble are those meetings themselves — that is, hosting meetings and videoconferencing itself.

“What you don’t want is to start a world war three with Zoom,” Awotona joked. (In addition to becoming the very verb-ified definition of video conferencing, Zoom is also a customer of Calendly’s.)

“We really see ourselves as a leading orchestration platform. What that means is that we really want to remain extensible and flexible. We want our users to bring their own best in class products,” he said. “We think about this in an agnostic way.”

But in a technology world that usually defaults back to the power of platforms, that position is not without its challenges.

“Calendly has a vision increasingly to be a central part of the meeting life cycle. What happens before, during and after the meeting. Historically, the obvious was before the meeting, but now it’s looking at integrations, automations and other things, so that it all magically happens. But moving into the rest of the lifecycle is a lot of opportunity but also many players,” admitted Bartlett, with others including older startups like X.ai and Doodle (owned by Swiss-based Tamedia) or newer entrants like Undock but also biggies like Google and Microsoft.

“It will be an interesting task to see where there are opportunities to partner or build or buy to build out its competitive position.”

You’ll notice that throughout this story I didn’t refer to Awotona’s position as a black founder — still very much a rarity among startups, and especially those valued at over $1 billion.

That is partly because in my conversations with him, it emerged that he saw it as just another detail. Still, it is one that is brought up a lot, he said, and so he understands it is important for others.

“I don’t spend a lot of time thinking about being black or not black,” he said. “It doesn’t change how I approach or built Calendly. I’m not incredibly conscious of my race or color, except for the last few years through he growth of Calendly. I find that more people approach me as a black tech founder, and that there is young black people who are inspired by the story.”

That is something he hopes to build on in the near future, including in his home country.

Pending pandemic chaos, he has plans to try to visit Nigeria later this year and to get more involved in the ecosystem in that country, I’m guessing as a mentor if not more.

“I just know the country that produced me,” he said. “There are a million Topes in Nigeria. The difference for me was my parents. But I’m not a diamond in the rough, and I want to get involved in some way to help with that full potential.”

Nov
08
2020
--

What we’ve learned about working from home 7 months into the pandemic

When large parts of the world were shutting down in March, we really didn’t know how we would move massive numbers of employees used to working in the office to work from home.

In early March, I wrote a piece on how to prepare for such an eventuality, speaking to several experts who had a background in the software and other tooling that would be involved. But the shift involved so much more than the mechanics of working at home. We were making this transition during a pandemic that was forcing us to deal with a much broader set of issues in our lives.

Yet here we are seven months later, and surely we must have learned some lessons along the way about working from home effectively, but what do these lessons look like and how can we make the most of this working approach for however long this pandemic lasts?

I spoke to Karen Mangia, vice president of customer and market insights at Salesforce and author of the book, Working from Home, Making the New Normal Work for You, to get her perspective on what working from home looks like as we enter our eighth month and what we’ve learned along the way.

Staying productive

As employees moved home in March, managers had to wonder how productive employees would be without being in the office. While many companies had flexible approaches to work, this usually involved some small percentage of employees working from home, not the entire workforce, and that presented challenges to management used to judging employee performance based for the most part on being in the building during the work day.

One of the things that we looked at in March was putting the correct tools in place to enable communication even when we weren’t together. Mangia says that those tools can help close what she calls the trust gap.

“Leaders want to know that their employees are working on what’s expected and delivering outcomes. Employees want to make sure their managers know how hard they’re working and that they’re getting things done. And the technology and tools I think help us solve for that trust gap in the middle,” she explained.

She believes the biggest thing that individuals can do at the moment is to simply reassess and look for small ways to improve your work life because we are probably not going to be returning to the office anytime soon. “I think what we’re discovering is the things that we can put in place to improve the quality of our own experiences as employees, as learners and as leaders can be very simple adjustments. This does not have to be a five year, five phase, $5 million roadmap kind of a situation. Simple adjustments matter,” she said, adding that could be measures as basic as purchasing a comfortable chair because the one you’ve been using at the dining room table is hurting your back.

Aug
03
2020
--

Amid pandemic, returning to offices remains an open question for tech leaders

As COVID-19 infections surge in parts of the U.S., many workplaces remain empty or are operating with skeleton crews.

Most agree that the decision to return to the office should involve a combination of business, government and medical officials and scientists who have a deep understanding of COVID-19 and infectious disease in general. The exact timing will depend on many factors, including the government’s willingness to open up, the experts’ view of current conditions, business leadership’s tolerance for risk (or how reasonable it is to run the business remotely), where your business happens to be and the current conditions there.

That doesn’t mean every business that can open will, but if and when they get a green light, they can at least begin bringing some percentage of employees back. But what that could look like is clouded in great uncertainty around commutes, office population density and distancing, the use of elevators, how much you can reasonably deep clean, what it could mean to have a mask on for eight hours a day, and many other factors.

To get a sense of how tech companies are looking at this, we spoke to a number of executives to get their perspective. Most couldn’t see returning to the office beyond a small percentage of employees this year. But to get a more complete picture, we also spoke to a physician specializing in infectious diseases and a government official to get their perspectives on the matter.

Taking it slowly

While there are some guidelines out there to help companies, most of the executives we spoke to found that while they missed in-person interactions, they were happy to take things slow and were more worried about putting staff at risk than being in a hurry to return to normal operations.

Iman Abuzeid, CEO and co-founder at Incredible Health, a startup that helps hospitals find and hire nurses, said her company was half-remote even before COVID-19 hit, but since then, the team is now completely remote. Whenever San Francisco’s mayor gives the go-ahead, she says she will reopen the office, but the company’s 30 employees will have the option to keep working remotely.

She points out that for some employees, working at home has proven very challenging. “I do want to highlight two groups that are pretty important that need to be highlighted in this narrative. First, we have employees with very young kids, and the schools are closed so working at home forever or even for the rest of this year is not really an option, and then the second group is employees who are in smaller apartments, and they’ve got roommates and it’s not comfortable to work at home,” Abuzeid explained.

Those folks will need to go to the office whenever that’s allowed, she said. For Lindsay Grenawalt, chief people officer at Cockroach Labs, an 80-person database startup in NYC, said there has to be a highly compelling reason to bring people back to the office at this point.

May
29
2019
--

How we scaled our startup by being remote first

Startups are often associated with the benefits and toys provided in their offices. Foosball tables! Free food! Dog friendly! But what if the future of startups was less about physical office space and more about remote-first work environments? What if, in fact, the most compelling aspect of a startup work environment is that the employees don’t have to go to one?

A remote-first company model has been Seeq’s strategy since our founding in 2013. We have raised $35 million and grown to more than 100 employees around the globe. Remote-first is clearly working for us and may be the best model for other software companies as well.

So, who is Seeq and what’s been the key to making the remote-first model work for us?  And why did we do it in the first place?

Seeq is a remote-first startup – i.e. it was founded with the intention of not having a physical headquarters or offices, and still operates that way – that is developing an advanced analytics application that enables process engineers and subject matter experts in oil & gas, pharmaceuticals, utilities, and other process manufacturing industries to investigate and publish insights from the massive amounts of sensor data they generate and store.

To succeed, we needed to build a team quickly with two skill sets: 1) software development expertise, including machine learning, AI, data visualization, open source, agile development processes, cloud, etc. and 2) deep domain expertise in the industries we target.

Which means there is no one location where we can hire all the employees we need: Silicon Valley for software, Houston for oil & gas, New Jersey for fine chemicals, Seattle for cloud expertise, water utilities across the country, and so forth. But being remote-first has made recruiting and hiring these high-demand roles easier much easier than if we were collocated.

Image via Seeq Corporation

Job postings on remote-specific web sites like FlexJobs, Remote.co and Remote OK typically draw hundreds of applicants in a matter of days. This enables Seeq to hire great employees who might not call Seattle, Houston or Silicon Valley home – and is particularly attractive to employees with location-dependent spouses or employees who simply want to work where they want to live.

But a remote-first strategy and hiring quality employees for the skills you need is not enough: succeeding as a remote-first company requires a plan and execution around the “3 C’s of remote-first”.

The three requirements to remote-first success are the three C’s: communication, commitment and culture.

May
29
2019
--

How we scaled our startup by being remote first

Startups are often associated with the benefits and toys provided in their offices. Foosball tables! Free food! Dog friendly! But what if the future of startups was less about physical office space and more about remote-first work environments? What if, in fact, the most compelling aspect of a startup work environment is that the employees don’t have to go to one?

A remote-first company model has been Seeq’s strategy since our founding in 2013. We have raised $35 million and grown to more than 100 employees around the globe. Remote-first is clearly working for us and may be the best model for other software companies as well.

So, who is Seeq and what’s been the key to making the remote-first model work for us?  And why did we do it in the first place?

Seeq is a remote-first startup – i.e. it was founded with the intention of not having a physical headquarters or offices, and still operates that way – that is developing an advanced analytics application that enables process engineers and subject matter experts in oil & gas, pharmaceuticals, utilities, and other process manufacturing industries to investigate and publish insights from the massive amounts of sensor data they generate and store.

To succeed, we needed to build a team quickly with two skill sets: 1) software development expertise, including machine learning, AI, data visualization, open source, agile development processes, cloud, etc. and 2) deep domain expertise in the industries we target.

Which means there is no one location where we can hire all the employees we need: Silicon Valley for software, Houston for oil & gas, New Jersey for fine chemicals, Seattle for cloud expertise, water utilities across the country, and so forth. But being remote-first has made recruiting and hiring these high-demand roles easier much easier than if we were collocated.

Image via Seeq Corporation

Job postings on remote-specific web sites like FlexJobs, Remote.co and Remote OK typically draw hundreds of applicants in a matter of days. This enables Seeq to hire great employees who might not call Seattle, Houston or Silicon Valley home – and is particularly attractive to employees with location-dependent spouses or employees who simply want to work where they want to live.

But a remote-first strategy and hiring quality employees for the skills you need is not enough: succeeding as a remote-first company requires a plan and execution around the “3 C’s of remote-first”.

The three requirements to remote-first success are the three C’s: communication, commitment and culture.

Jan
17
2019
--

On-demand workspace platform Breather taps new CEO

Breather’s new CEO Bryan Murphy / Breather Press Kit

Breather, the platform that provides on-demand private workspace, announced today that it has appointed Bryan Murphy as its new CEO.

Before joining Breather, Murphy was the founder and president of direct-to-consumer mattress startup, Tomorrow Sleep. Prior to Tomorrow Sleep, Murphy held posts as an advisor to investment firms and as an executive at eBay after the company acquired his previous company, WHI Solutions — an e-commerce platform for aftermarket auto parts — where Murphy was the co-founder and CEO.

Breather believes Murphy’s extensive background scaling e-commerce and SaaS platforms, as well as his experience working with incumbents across a number of traditional industries, can help it execute through its next stage of global growth.

Murphy is filling the vacancy left by co-founder and former CEO Julien Smith, who stepped down as chief executive this past September, just three months after the company completed its $45 million Series C round, which was led by Menlo Ventures and saw participation from RRE Ventures, Temasek Holdings, Ascendas-Singbridge and Caisse de Depot et Placement du Quebec.

In a past statement on his transition, Smith said: “As I reflect on my strengths and consider what it will take for the company to reach its full potential, I realize bringing on an executive with experience scaling a company through the next level of growth is the best thing for the business.”

Smith, who remains with the company as chairman of the board, believes Murphy more than fits the bill. “Bryan’s record of scaling brands in competitive markets makes him an ideal leader to support this momentum, and I’m excited to see where he takes us next,” Smith said.

In a conversation with TechCrunch, Murphy explained that Breather’s next growth phase will ultimately come down to its ability to continue the global expansion of its network of locations and partner landlords while striking the optimal balance between rental economics and employee utility, productivity and performance. With new spaces and ramped marketing efforts, Murphy and the company expect 2019 to be a big year for Breather — “I think this year, you’re going to start hearing a lot about Breather and it really being in a leadership role for the industry.”

Breather’s workspace at 900 Broadway in New York City is one of 500+ network locations accessible to users.

On Breather’s platform, users are currently able to access a network of more than 500 private workspaces across 10 major cities around the world, which can be booked as meeting space or short-term private office space.

Meeting spaces can be reserved for as little as two hours, while office space can be booked on a month-to-month basis, providing businesses with financial flexibility, private and more spacious alternatives to co-working options, and the ability to easily change offices as they grow. For landlords, Breather allows property owners to generate value from underutilized space by providing a turnkey digital booking system, as well as expertise in the short-term rental space.

Murphy explained to TechCrunch that part of what excited him most about his new role was his belief in Breather’s significant product-market fit and the immense addressable market that he sees for flexible workspaces longer-term. With limited penetration to date, Murphy feels the commercial office space industry is in just the third inning of significant transformation. 

Murphy believes that long-term growth for Breather and other flexible space providers will be driven by a heightened focus on employee flexibility and wellness, a growing number of currently underserved companies whose needs fall between co-working and traditional direct leasing, and the need for landlords to support a wider variety of office space options as workforce demographics and behaviors shift. 

Murphy believes that the ease, flexibility and unlocked value Breather provides puts the platform in a great position to win market share.

“Breather has built a remarkable commercial real estate e-commerce and services platform that offers one-click access to over 500 workspaces around the world,” said Murphy in a press release. “To our customers, having access to workspace that is turnkey, affordable, beautiful, productive and that can flex up and down based on needs is a total game changer.”

To date, Breather has served more than 500,000 customers and has raised more than $120 million in investment.

Dec
15
2018
--

The limits of coworking

It feels like there’s a WeWork on every street nowadays. Take a walk through midtown Manhattan (please don’t actually) and it might even seem like there are more WeWorks than office buildings.

Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other complexities that people have full PHDs on. I’m just a bitter, born-and-bred New Yorker trying to figure out why I’ve been stuck in between subway stops for the last 15 minutes, so please reach out with your take on any of these thoughts: @Arman.Tabatabai@techcrunch.com.

Co-working has permeated cities around the world at an astronomical rate. The rise has been so remarkable that even the headline-dominating SoftBank seems willing to bet the success of its colossal Vision Fund on the shift continuing, having poured billions into WeWork – including a recent $4.4 billion top-up that saw the co-working king’s valuation spike to $45 billion.

And there are no signs of the trend slowing down. With growing frequency, new startups are popping up across cities looking to turn under-utilized brick-and-mortar or commercial space into low-cost co-working options.

It’s a strategy spreading through every type of business from retail – where companies like Workbar have helped retailers offer up portions of their stores – to more niche verticals like parking lots – where companies like Campsyte are transforming empty lots into spaces for outdoor co-working and corporate off-sites. Restaurants and bars might even prove most popular for co-working, with startups like Spacious and KettleSpace turning restaurants that are closed during the day into private co-working space during their off-hours.

Before you know it, a startup will be strapping an Aeron chair to the top of a telephone pole and calling it “WirelessWorking”.

But is there a limit to how far co-working can go? Are all of the storefronts, restaurants and open spaces that line city streets going to be filled with MacBooks, cappuccinos and Moleskine notebooks? That might be too tall a task, even for the movement taking over skyscrapers.

The co-working of everything

Photo: Vasyl Dolmatov / iStock via Getty Images

So why is everyone trying to turn your favorite neighborhood dinner spot into a part-time WeWork in the first place? Co-working offers a particularly compelling use case for under-utilized space.

First, co-working falls under the same general commercial zoning categories as most independent businesses and very little additional infrastructure – outside of a few extra power outlets and some decent WiFi – is required to turn a space into an effective replacement for the often crowded and distracting coffee shops used by price-sensitive, lean, remote, or nomadic workers that make up a growing portion of the workforce.

Thus, businesses can list their space at little-to-no cost, without having to deal with structural layout changes that are more likely to arise when dealing with pop-up solutions or event rentals.

On the supply side, these co-working networks don’t have to purchase leases or make capital improvements to convert each space, and so they’re able to offer more square footage per member at a much lower rate than traditional co-working spaces. Spacious, for example, charges a monthly membership fee of $99-$129 dollars for access to its network of vetted restaurants, which is cheap compared to a WeWork desk, which can cost anywhere from $300-$800 per month in New York City.

Customers realize more affordable co-working alternatives, while tight-margin businesses facing increasing rents for under-utilized property are able to pool resources into a network and access a completely new revenue stream at very little cost. The value proposition is proving to be seriously convincing in initial cities – Spacious told the New York Times, that so many restaurants were applying to join the network on their own volition that only five percent of total applicants were ultimately getting accepted.

Basically, the business model here checks a lot of the boxes for successful marketplaces: Acquisition and transaction friction is low for both customers and suppliers, with both seeing real value that didn’t exist previously. Unit economics seem strong, and vetting on both sides of the market creates trust and community. Finally, there’s an observable network effect whereby suppliers benefit from higher occupancy as more customers join the network, while customers benefit from added flexibility as more locations join the network.

… Or just the co-working of some things

Photo: Caiaimage / Robert Daly via Getty Images

So is this the way of the future? The strategy is really compelling, with a creative solution that offers tremendous value to businesses and workers in major cities. But concerns around the scalability of demand make it difficult to picture this phenomenon becoming ubiquitous across cities or something that reaches the scale of a WeWork or large conventional co-working player.

All these companies seem to be competing for a similar demographic, not only with one another, but also with coffee shops, free workspaces, and other flexible co-working options like Croissant, which provides members with access to unused desks and offices in traditional co-working spaces. Like Spacious and KettleSpace, the spaces on Croissant own the property leases and are already built for co-working, so Croissant can still offer comparatively attractive rates.

The offer seems most compelling for someone that is able to work without a stable location and without the amenities offered in traditional co-working or office spaces, and is also price sensitive enough where they would trade those benefits for a lower price. Yet at the same time, they can’t be too price sensitive, where they would prefer working out of free – or close to free – coffee shops instead of paying a monthly membership fee to avoid the frictions that can come with them.

And it seems unclear whether the problem or solution is as poignant outside of high-density cities – let alone outside of high-density areas of high-density cities.

Without density, is the competition for space or traffic in coffee shops and free workspaces still high enough where it’s worth paying a membership fee for? Would the desire for a private working environment, or for a working community, be enough to incentivize membership alone? And in less-dense and more-sprawl oriented cities, members could also face the risk of having to travel significant distances if space isn’t available in nearby locations.

While the emerging workforce is trending towards more remote, agile and nomadic workers that can do more with less, it’s less certain how many will actually fit the profile that opts out of both more costly but stable traditional workspaces, as well as potentially frustrating but free alternatives. And if the lack of density does prove to be an issue, how many of those workers will live in hyper-dense areas, especially if they are price-sensitive and can work and live anywhere?

To be clear, I’m not saying the companies won’t see significant growth – in fact, I think they will. But will the trend of monetizing unused space through co-working come to permeate cities everywhere and do so with meaningful occupancy? Maybe not. That said, there is still a sizable and growing demographic that need these solutions and the value proposition is significant in many major urban areas.

The companies are creating real value, creating more efficient use of wasted space, and fixing a supply-demand issue. And the cultural value of even modestly helping independent businesses keep the lights on seems to outweigh the cultural “damage” some may fear in turning them into part-time co-working spaces.

And lastly, some reading while in transit:

Powered by WordPress | Theme: Aeros 2.0 by TheBuckmaker.com