What kind of workspace is best for your startup?
by Lauren Drell August 2011
This post originally appeared on the American Express OPEN Forum
Startup life is all about bootstrapping, but you need a place to work, right? Here’s a breakdown of three workplace styles — home-working, co-working and traditional office space — with pros, cons and input from startups utilizing each environment so you can figure which the right choice is for you.
Working From Home
Why work from home: For those just starting out for those who are one-man bands, it makes the most sense to work from home. “There’s simply no budget for [an office], as I bootstrap the company,” says Paul Molluzzo, founder of Baby Goes Mobile, a web app that lets parents create a private baby book they can view and update from their mobile phones. “I have the space and tools — computer, cell phone and coffee machine — to get my work done, so paying for a space didn’t make sense.” Plus, digital tools like email, Skype, screenshares, smart phones and FreeConferenceCall.com mean you can do work anytime, anywhere and communicate with just about anyone, so it’s not a must to splurge on an office. There’s also the perk of being able to take work breaks and spend time with his wife and son, says Molluzzo.
Greg Golkin, co-founder of the in-the-works social learning platform ThinkBinder, takes working from home to a new level — he lives with his coworker, Dave Lee. For them, “working from home is the most efficient situation for us to build our product — we can be machines over here,” says Golkin, explaining that the two simply “work, eat, sleep and gym, all with a constant Spotify soundtrack.” The partners actually welcome the lack of separation between work and personal life — “if we are home and not working, we do not feel comfortable, and that is great.” Plus, for nocturnal types who work late, it’s pretty convenient to be a few steps from your bed at 4 a.m. instead of having to travel home.
And let’s not forget that working from home means you don’t have to pay for office space. David Rostan, cofounder of communications startup Umagram, says that his decision to work from home (his cofounder works from his own home, so they’re remote) was financial, but “less in the ‘we can’t afford it’ sense and more in the ‘if we saved that money, we could spend it on something way more important’ way.” As his company grows, he likes the option of hiring flexibly and being able to consider job candidates from other cities and countries. He and his cofounder John meet a few times a week at a coffee shop to touch base and update one another on their respective worlds and solve problems in real-time, which helps to keep them efficient.
But it’s not all rainbows and sunshine. As expected, it can be hard to maintain a work-life balance when your living room doubles as your corporate headquarters. “When your baby son and your developer are vying for your attention, it’s challenging to work the two out,” says Molluzzo, admitting that to-dos sometimes get lost in the shuffle.
Another downside, not surprisingly, is that working from home can be lonely. In an office, there’s camaraderie and water cooler chit-chat. “Had I taken a spot at [a coworking space], I’d have people to go to lunch with to chat about startups and tech, which would have been nice,” says Molluzzo. “But that seems more of a luxury than a necessity.” Rostan agrees — he thinks coworking spaces can be great for networking, but he says he spends so much time on the phone that he probably wouldn’t get to network that much.
Of course, a home office can only get you so far — most homes have a capacity at which things just get chaotic and awkward. “We’ve maxed out our capacity, and we’re beginning to recruit more developers — it would be quite odd to ask them to sit on the couch to work,” says Golkin. Once they solidify the next hire, the ThinkBinder team will be moving to their own offices.
If you work from home but are finding that your digs aren’t cutting it for business meetings and interviews, you can always hit up a local coffee shop, but be sure to follow coffee shop etiquette.
Co-working Space
Co-working spaces, like General Assembly, Coloft, Dogpatch Labs, Hive at 55, COOP and CoHabitat, are used for office space by many startups.
For a small business with two to three people, coworking is a great option. The cost is much lower than traditional office space, and you have access to a lot of resources — conference room, printers, scanners, Wi-Fi, snacks, coffees — that you’d otherwise have to pay for all by yourself. And don’t forget the other coworkers who could become potential partners or clients down the road.
Dylan Goelz of Roadify works out of Hive at 55 and says he finds the coworking environment to be “a big plus.” He says his team’s focus has benefited from having other work-minded people around, and they’ve even worked with a design team a few seats away. “I’ve learned more about other types and styles of business just by walking to lunch with fellow coworkers than I would have anywhere else,” says Goelz, adding that the occasional inconvenience (not finding a seat) or distraction (laughter or loud conversations in the room) is “outweighed by efficiency, cost-effectiveness and camaraderie.”
One of Goelz’s fellow coworkers, Michelle Weiss, does systems implementation consulting online at the Hive, and though she admits she could do it from home, she comes to the shared office space because of the people. “Everyone there is working towards something, and it’s stimulating to be in that environment,” she says. So Weiss pays $150 a month to have access to the Hive two days per week.
Brian DiFeo, the Hive’s community manager, says the trend is to be professional but have a sense of humor and be ready for the inevitable group laugh or room-wide joke. Whether that’s a funny ringtone or an impromptu blast of Rebecca Black’s “Friday,” coworking can be a great way to network, make friends and have a built-in advisory board of people from many different industries. Plus, a lot of coworking spaces offer classes and seminars on new technology and tools. And of course, all of this comes without the burden and risk of finding and paying for your own office space.
Traditional Office Space
Once your startup has grown to 10 or so people, it might be time to get your own office space. And that’s a good thing, because growing is good, but getting your own office space is not without potential pitfalls.
Zozi, which sells unique experiences and activities, is headquartered in San Francisco’s Financial District and has its own pad. The startup launched in CEO and founder TJ Sassani’s house in Byron Bay, Australia, and then became a coffee-shop-based company when he moved to the U.S. Soon they had grown into a shared space in San Francisco, and finally zozi got its own office space in August 2008. (There’s also a small New York team that works out of a co-working space.)
Having their own office space really enables the various departments to communicate and work together to improve zozi and the customer experience. “We are one team, and the energy is felt by everyone in the office — that’s the gas we run on everyday,” says Sassani, who describes their office space as an open, collaborative and creative space, in which “everyone can tangibly interact with zozi’s vision everyday.” Also adding that energy are trek road cycles stashed throughout the office and inflatable sharks — things that might not fly (or float) in a shared-office space … and probably wouldn’t fit in an apartment.
Zozi’s growth is admirable and enviable, but startups should realize that getting your own office space is a big commitment. Real estate agent David Goldberg of Living NY offers some guidelines and wisdom. First, find an area that matches your companies needs and budget. In Manhattan’s Silicon Alley, for example, commercial office space varies in price from block to block — highly desirable offices near Union Square and the Flatiron District can be $35 to $50 per square foot, and it’s estimated that there should be about 100 square feet per person. Goldberg says the challenge with getting office space for a startup is that quality small office spaces (less than 3,500 square feet) are in high demand, and there’s a very low supply. Most startups anticipate growth, so your first small office likely will not sustain much growth. However, many landlords won’t consider a lease that is shorter than three years, because the expenses both for landlord and tenant — lawyer fees, office build-out, vacancies and moving fees — add up. (Hence, the coworking trend.)
If you do find a space that fits your needs, you’ll likely need bank statements, the first three pages of the past two year’s tax returns, and profit-and-loss statements — of course, if you’re just starting out, you might not have much of this paperwork, so you’ll need to explain to the landlord what your startup is all about so they feel comfortable renting space to a fledgling business. Then there’s the security deposit, moving fees, good-guy clause, personal guarantee and insurance — yeah, it can be a costly endeavor. Fortunately, most buildings these days are set up for Internet, phones and other business infrastructure, so you don’t have to worry about installing those modern amenities. Landlords will also often agree to build-out of a conference room or private offices if your offer is strong enough, Goldberg says. Otherwise, you can do the build-out and eat the costs. Be careful not to ask for too much work, however, which can make the landlord more hesitant to lower the rent in negotiations. One rule of thumb is that the longer the lease is, the more work the landlord will be willing to do.
Before you sign on the dotted line and start renovating, make sure that you’re truly ready for an office of your own. “The timing really should be right before you decide to move into a space and call it your own,” says Sassani.
What kind of working environment does your startup call home? Let us know in the comments below
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