Jun
15
2020
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How Liberty Mutual shifted 44,000 workers from office to home

In a typical month, an IT department might deal with a small percentage of employees working remotely, but tracking a few thousand employees is one thing — moving an entire company offsite requires next-level planning.

To learn more about how large organizations are adapting to the rapid shift to working from home, we spoke to Liberty Mutual CIO James McGlennon, who helped orchestrate his company’s move about the challenges he faced as he shifted more than 44,000 employees in a variety of jobs, locations, cultures and living situations from office to home in short order.

Laying the groundwork

Insurance company Liberty Mutual is headquartered in the heart of Boston, but the company has offices in 29 countries. While some staffers in parts of Asia and Europe were sent home earlier in the year, by mid-March the company had closed all of its offices in the U.S. and Canada, eventually sending every employee home.

McGlennon said he never imagined such a situation, but the company saw certain networking issues in recent years that gave them an inkling of what it might look like. That included an unexpected incident in which two points on a network ring around one of its main data centers went down in quick succession, first because a backhoe hit a line, and then at another point because someone stole the fiber-optic cable.

That got the CIO and his team thinking about how to respond to worst cases. “We certainly hadn’t contemplated needing to get 44,000 people working from home or working remotely so quickly, but there have been a few things that have happened over the last few years that made me think,” he said.

Jun
02
2020
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Remote work helps Zoom grow 169% in one year, posting $328.2M in Q1 revenue

Today after the bell, video-chat service Zoom reported its Q1 earnings. The company disclosed that it generated $328.2 million in revenue, up 169% compared to the year-ago period. The company also reported $0.20 per-share in adjusted profit during the three-month period.

Analysts, as averaged by Yahoo Finance, expected Zoom to report $202.48 million in revenue, and a per-share profit of $0.09. After its earnings smash, shares of Zoom were up slightly Update: Zoom shares are now up 2.3% ahead of its earnings call; investors had priced in this outsized-performance, it seems.

Zoom grew 78% in its preceding quarter on an annualized basis. The company’s growth acceleration is notable.

Investors were expecting big gains. Before its earnings, shares in the popular business-to-business service were up by more than 3x during the year; Zoom has found itself in an updraft due in part to COVID-19 driving workers and others to stay home and work remotely. Zoom’s software has also seen large purchase amongst consumers hungry for a video chatting solution that was simple and that works.

If the company could sustain its valuation gains going into this earnings report was an open question that has now been answered.

Gains

Zoom’s growth in its Q1 fiscal 2021 generated some notable profit results for the firm. The firm’s net income, an unadjusted profit metric, rose from $0.2 million in the year-ago quarter to $27.0 million in its most recent three months.

And Zoom’s cash generation was astounding. Here’s how the company described its results:

Net cash provided by operating activities was $259.0 million for the quarter, compared to $22.2 million in the first quarter of fiscal year 2020. Free cash flow was $251.7 million, compared to $15.3 million in the first quarter of fiscal year 2020.

It’s difficult to recall another company that has managed such growth in cash generation in such a short period of time, driven mostly by operations and not other financial acts. Zoom’s customer numbers were similarly sharp, with the firm reporting that it had 265,400 customers with more than 10 seats (employees) at the end of the quarter, which was up 354% from the year-ago period.

Though not all news for Zoom was good. Indeed, the company’s gross margin fell sharply in the quarter, compared to its year-ago result. In is Q1 fiscal 2020, Zoom reported a gross margin of around 80%. In its most recent quarter that number slipped to around 68%. In short, the company managed to convert many free users to paying customers, but still had to carry the costs of free usage of its product, something that has exploded in recent months.

Looking ahead, Zoom expects the current quarter to be another blockbuster period. The company noted in its release that it expects “between $495.0 million and $500.0 million” in revenue for Q2 of its fiscal 2021 (the current period). Looking ahead for the full fiscal year, Zoom anticipates revenues “between $1.775 billion and $1.800 billion,” numbers that take into account “the demand for remote work solutions for businesses” and “increased churn in the second half of the fiscal year” when some customers might no longer need Zoom if they can return to their offices.

Its shares might have priced in these results, but the numbers themselves are simply massive. Just three months ago Zoom turned in revenues of just $188.3 million. That’s less than it generated in free cash flow during its next three months.

May
21
2020
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12 VCs share their thoughts on enterprise startup trends and opportunities

Compared to other tech firms, enterprise companies have held up well during the pandemic.

If anything, the problems enterprises were facing prior to the economic downturn have become even more pronounced; if you were thinking about moving to the cloud or just dabbling in it, you’re probably accelerating that motion. If you were trying to move off of legacy systems, that has become even more imperative. And if you were attempting to modernize processes and workflows, whether engineer- and developer-related, or across other parts of the organization, chances are good that you are giving that a much closer look.

We won’t be locked down forever and employees will eventually return to offices, but it’s likely that many companies will take the lessons they learned during this era and put them to work inside their organizations. Startups are uniquely positioned to help companies solve these new modern kinds of problems, much more so than a legacy vendor (which could be itself trying to update its approach).

Venture capitalists certainly understand all of these dynamics and are always dutifully searching for startups that could help companies shift to a digital future more quickly.

We spoke to 12 of them to take their pulse and learn more about the trends that are exciting them, what they look for in an investment opportunity and which parts of the enterprise are ripe for startups to impact:

  • Max Gazor, CRV
  • Navin Chadda, Mayfield
  • Matt Murphy, Menlo Venture Capital
  • Soma Somasagar, Madrona Ventures
  • Jon Lehr, Work-Bench
  • Steve Herrod, General Catalyst
  • Jai Das, Sapphire Ventures
  • Max Gazor,  CRV
  • Ed Sim, Boldstart Ventures
  • Martin Cassado, Andreessen Horowitz
  • Vassant Natarajan, Accel
  • Dharmesh Thakker, Battery Ventures

Max Gazor, CRV

What trends are you most excited about in the enterprise from an investing perspective?

It’s abundantly clear that cloud software markets are bigger than most people anticipated. We continue to invest heavily there as we have been doing for the last decade.

Specifically, the most exciting trend right now in enterprise is low-code software development. I’m on the board of Airtable, where I led the Series A and co-led the Series B investments, so I see first hand how this will play out. We are heading toward a future where hundreds of millions of people will be empowered to compose software that fits their own needs. Imagine the productivity and transformation that will unlock in the world! It may be one of the largest market opportunities we have seen since cloud computing.

May
14
2020
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Why we’re doubling down on cloud investments right now

Years from now, people will look back on the COVID-19 pandemic as a watershed moment for society and the global economy.

Wearing a mask might be as common as owning a phone; telework, telemedicine and online education will be more of a norm than a backup plan; and for the global economy, the cloud will have transformed the underlying infrastructure of businesses and entire industries.

COVID-19 is a turning point for the cloud and cloud company founders. For its computing power and as a delivery model of software, the cloud has been embraced as a solution to many challenges that businesses face during today’s economic downturn and recovery. Not only is the cloud industry more resilient than other industries, but the cloud model offers businesses a promising future in the age of social distancing and beyond.

We believe that once founders find shelter in the cloud, they’ll never go back.

Cloud’s resiliency amid historic volatility

Over the past decade, there’s been a massive market shift from on-premises to cloud, as 94% of enterprises use at least one cloud service today. 2020 was already a milestone year for the cloud industry, as aggregate SaaS and IaaS run-rate revenue each crossed $100 billion, and the BVP Nasdaq Emerging Cloud Index (^EMCLOUD) market cap crossed $1 trillion in early February. Yet in a matter of days, as the COVID-19 pandemic spread, fear tore through financial markets.

In early March, public markets experienced the steepest crash in history with volatility we haven’t seen since the Great Recession. The cloud index market cap dropped to ~$750 million and cloud multiples returned close to their historical averages of ~7x while the VIX volatility index spiked to the mid-80s. Both at global highs in February 2020, the ^EMCLOUD and the S&P 500 traded off by roughly 35% by mid-March. Over the next two months, though, the ^EMCLOUD recouped those losses, charging to a new all-time high on May 7.

The cloud index has continued its rise since then, and as of the close on May 11 has a market cap above $1.2 trillion and has returned to the lofty 12x forward run rate revenue multiples from 2019. Similar to Adobe in 2012, we expect many enterprises to transition over to the cloud model, and the index will continue to expand. As we predicted in this year’s State of the Cloud 2020, by 2025 we expect the cloud to penetrate 50% of enterprise software.

Apr
14
2020
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Replace non-stop Zoom with remote office avatars app Pragli

Could avatars that show what co-workers are up to save work-from-home teams from constant distraction and loneliness? That’s the idea behind Pragli, the Bitmoji for the enterprise. It’s a virtual office app that makes you actually feel like you’re in the same building.

Pragli uses avatars to signal whether co-workers are at their desk, away, in a meeting, in the zone while listening to Spotify, taking a break at a digital virtual water coooler or done for the day. From there, you’ll know whether to do a quick ad hoc audio call, cooperate via screenshare, schedule a deeper video meeting or a send a chat message they can respond to later. Essentially, it translates the real-word presence cues we use to coordinate collaboration into an online workplace for distributed teams.

“What Slack did for email, we want to do for video conferencing,” Pragli co-founder Doug Safreno tells me. “Traditional video conferencing is exclusive by design, whereas Pragli is inclusive. Just like in an office, you can see who is talking to who.” That means less time wasted planning meetings, interrupting colleagues who are in flow or waiting for critical responses. Pragli offers the focus that makes remote work productive with the togetherness that keeps everyone sane and in sync.

The idea is to solve the top three problems that Pragli’s extensive interviews and a Buffer/AngelList study discovered workers hate:

  1. Communication friction
  2. Loneliness
  3. Lack of boundaries

You never have to worry about whether you’re intruding on someone’s meeting, or if it’d be quicker to hash something out on a call instead of vague text. Avatars give remote workers a sense of identity, while the Pragli water cooler provides a temporary place to socialize rather than an endless Slack flood of GIFs. And because you clock in and out of the Pragli office just like a real one, co-workers understand when you’ll reply quickly versus when you’ll respond tomorrow unless there’s an emergency.

“In Pragli, you log into the office in the morning and there’s a clear sense of when I’m working and when I’m not working. Slack doesn’t give you a strong sense if they’re online or offline,” Safreno explains. “Everyone stays online and feels pressured to respond at any time of day.”

Pragli co-founder Doug Safreno

Safreno and his co-founder Vivek Nair know the feeling first-hand. After both graduating in computer science from Stanford, they built StacksWare to help enterprise software customers avoid overpaying by accurately measuring their usage. But when they sold StacksWare to Avi Networks, they spent two years working remotely for the acquirer. The friction and loneliness quickly crept in.

They’d message someone, not hear back for a while, then go back and forth trying to discuss the problem before eventually scheduling a call. Jumping into synchronous communicating would have been much more efficient. “The loneliness was more subtle, but it built up after the first few weeks,” Safreno recalls. “We simply didn’t socially bond while working remotely as well as in the office. Being lonely was de-motivating, and it negatively affected our productivity.”

The founders interviewed 100 remote engineers, and discovered that outside of scheduled meetings, they only had one audio or video call with co-workers per week. That convinced them to start Pragli a year ago to give work-from-home teams a visual, virtual facsimile of a real office. With no other full-time employees, the founders built and released a beta of Pragli last year. Usage grew 6X in March and is up 20X since January 1.

Today Pragli officially launches, and it’s free until June 1. Then it plans to become freemium, with the full experience reserved for companies that pay per user per month. Pragli is also announcing a small pre-seed round today led by K9 Ventures, inspired by the firm’s delight using the product itself.

To get started with Pragi, teammates download the Pragli desktop app and sign in with Google, Microsoft or GitHub. Users then customize their avatar with a wide range of face, hair, skin and clothing options. It can use your mouse and keyboard interaction to show if you’re at your desk or not, or use your webcam to translate occasional snapshots of your facial expressions to your avatar. You can also connect your Spotify and calendar to show you’re listening to music (and might be concentrating), reveal or hide details of your meeting and decide whether people can ask to interrupt you or that you’re totally unavailable.

From there, you can by audio, video or text communicate with any of your available co-workers. Guests can join conversations via the web and mobile too, though the team is working on a full-fledged app for phones and tablets. Tap on someone and you can instantly talk to them, though their mic stays muted until they respond. Alternatively, you can jump into Slack-esque channels for discussing specific topics or holding recurring meetings. And if you need some down time, you can hang out in the water cooler or trivia game channel, or set a manual “away” message.

Pragli has put a remarkable amount of consideration into how the little office social cues about when to interrupt someone translate online, like if someone’s wearing headphones, in a deep convo already or if they’re chilling in the microkitchen. It’s leagues better than having no idea what someone’s doing on the other side of Slack or what’s going on in a Zoom call. It’s a true virtual office without the clunky VR headset.

“Nothing we’ve tried has delivered the natural, water-cooler-style conversations that we get from Pragli,” says Storj Labs VP of engineering JT Olio. “The ability to switch between ‘rooms’ with screen sharing, video and voice in one app is great. It has really helped us improve transparency across teams. Plus, the avatars are quite charming as well.”

With Microsoft’s lack of social experience, Zoom consumed with its scaling challenges and Slack doubling down on text as it prioritizes Zoom integration over its own visual communication features, there’s plenty of room for Pragli to flourish. Meanwhile, COVID-19 quarantines are turning the whole world toward remote work, and it’s likely to stick afterwards as companies de-emphasize office space and hire more abroad.

The biggest challenge will be making comprehensible enough to onboard whole teams such a broad product encompassing every communication medium and tons of new behaviors. How do you build a product that doesn’t feel distracting like Slack but where people can still have the spontaneous conversations that are so important to companies innovating?,” Safreno asks. The Pragli founders are also debating how to encompass mobile without making people feel like the office stalks them after hours.

“Long-term, [Pragli] should be better than being in the office because you don’t actually have to walk around looking for [co-workers], and you get to decide how you’re presented,” Safreno concludes. “We won’t quit, because we want to work remotely for the rest of our lives.”

Apr
13
2020
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How Adobe shifted a Las Vegas conference to executives’ living rooms in less than 30 days

Adobe was scheduled to hold its annual conference in Las Vegas two weeks ago, but the coronavirus pandemic forced the company to make alternate plans. In less than a month, its events team shifted venues for the massive conference, not once, but twice as the severity of the situation became clear.

This year didn’t just involve Adobe Summit itself. To make things more interesting, it was also hosting Magento Imagine as a separate conference within a conference at the same time. (Adobe bought Magento in 2018 for $1.6 billion.)

Originally, Adobe had more than 500 sessions planned across four venues on the Las Vegas Strip, with more than 23,000 attendees expected. Combining all of the sponsors, partners and Adobe personnel, it involved more than 40,000 hotel rooms.

Once it became clear that such a large event couldn’t happen, the company reimagined the conference as a fully digital experience.

Plan A

VP of Experience Marketing Alex Amado is in charge of planning Adobe Summit, a tall task under normal circumstances.

“Planning Summit is a year-round endeavor,” he said. “Literally within weeks of finishing one of those Las Vegas events we are starting on the next one, and some of the work actually is on an 18 or 24-month cycle because we have those long-term hotel contracts and all of that stuff.

“For the last 12 months, basically, we had people who were working on what we now call Plan A — and we didn’t know that we needed a Plan B and Plan C — and the original event was going to be our biggest yet.”

2019 Adobe Summit stage in Las Vegas. Photo: Ron Miller/TechCrunch

After the team began to wonder in January if the virus would force them to change how they deliver the conference, they started building contingency plans in earnest, Amado said. “As we got into February, things started looking a little scarier, and it very quickly escalated to the point where we were talking really seriously about Plan B.”

Mar
24
2020
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GitLab offers key lessons in running an all-remote workforce in new e-book

As companies that are used to having workers in the same building struggle to find ways to work from home, one company that has been remote from Day One is GitLab . It recently published a handbook to help other companies who are facing the work-from-home challenge for the first time.

Lest you think GitLab is a small organization, it’s not. It’s 1,200 employees strong, all of which work from home in a mind boggling 67 countries. And it’s doing well. In September, the company raised $268 million on a $2.75 billion valuation.

Given that it has found a way to make a decentralized company work, GitLab has decided to share the best practices they’ve built up over the years to help others just starting on this journey.

Among the key bits of advice in the 34-page report, perhaps the most important to note when you begin working apart is to document everything. GitLab has a reputation for hyper transparency, publishing everything from its 3-year business strategy to its projected IPO date for the world to see.

But it’s also about writing down policies and procedures and making them available to the remote workforce. When you’re not in the same building, you can’t simply walk up to someone’s cubicle and ask a question, so you need to be vigilant about documenting your processes in a handbook that is available online and searchable.

“By adopting a handbook-first approach, team members have ‘a single source of truth’ for answers. Even though documentation takes a little more time upfront, it prevents people from having to ask the same question repeatedly. Remote work is what led to the development of GitLab’s publicly viewable handbook,” the company wrote in the e-book.

That includes an on-boarding procedure because folks aren’t coming into a meeting with HR when they start at GitLab. It’s essential to have all the information new hires need in one place, and the company has worked hard to build on-boarding templates. They also offer remote GitLab 101 meetings to orient folks who need more face time to get going.

You would think when you work like this, meetings would be required, but GitLab suggests making meetings optional. That’s because people are spread across the world’s time zones, making it difficult to get everyone together at the same time. Instead, the company records meetings and brainstorms ideas, essentially virtual white-boarding in Google Docs.

Another key piece of advice is to align your values with a remote way of working. That means changing your management approach to fit the expectations of a remote workforce. “If your values are structured to encourage conventional colocated workplace norms (such as consensus gathering or recurring meetings with in-person teams), rewrite them. If values are inconsistent with the foundation of remote work, there’s bound to be disappointment and confusion. Values can set the right expectations and provide a clear direction for the company going forward,” the company wrote.

This is just scratching the surface of what’s in the handbook, but it’s a valuable resource for anyone who is trying to find a way to function in a remote work environment. Each company will have its own culture and way of dealing with this, of course, but when a company like GitLab, which was born remote, provides this level of advice, it pays to listen and take advantage of their many years of expertise.

May
29
2019
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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.

Dec
15
2018
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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:

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