137. Dan Zakai, CEO and Co-Founder of Mindspace, on launching 30 spaces in 6 years

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137. Dan Zakai, CEO and Co-Founder of Mindspace, on launching 30 spaces in 6 years

00:00:01 Welcome to the everything Coworking podcast, where you learn what you need to know about how the world wants to work. And now your host, co working space owner and trend expert Jamie Russo Way. Welcome to the everything Coworking podcast. This is Jamie Russo. Thank you for joining me today. I am looking forward to sharing today's episode with you. I interview Danza Chi, who is co founder and CEO of Mind Space. They have over 30 locations internationally. Those of you outside of the U. S.

00:00:37 May be more familiar with the brand. They just launched their 1st 2 spaces in the U. S. In the last year, we in Washington, D. C. And San Francisco and the mind space team has attended the GB way conferences a few times. So I met the team there, and then I had the pleasure of touring their space in San Francisco back in November and just was loved it. It's totally my aesthetic. They have super fancy coffee machines, hunt every floor, a really fantastic community management team in just a great space.

00:01:10 And so I was really interested in hearing their story, and Dan was kind enough to take some time out of his crazy travel schedule. I'm sure you can imagine 30 locations across. I can't remember how many countries he says it in the interview. It's a lot. It keeps him super busy. And so I think you're gonna. I love his story about how they've grown their brand, who they serve, things that we all think about in our business. I love hearing this from folks who have expanded and been through this process,

00:01:39 and they've done it fairly quickly. It's not very common that we see 30 locations over six years and that they've done you know so well. I was especially impressed with their ability to scale that experience to the U. S. Where they, you know, that's not where their core team is. But I had a great experience visiting there. San Francisco location. And as you can imagine, I have a bit of a high bar when I visit faces, so I can't wait to introduce you to Dan before we get to that really quick.

00:02:09 The Coworking Startup School opening the doors at the beginning of March, several of the students for the last couple of cohorts are starting to launch their spaces. Lots of activity in our flight group, which is the program we run to extend that Coworking startup school experience this program. It's for you. If you're working on starting a space and are looking to invest in doing it right, you want to avoid costly mistakes and stress by getting expert and peer support in a highly facilitated environment. We want to make sure you create the right space for you and your target market right from the beginning.

00:02:44 We want to make sure you get the business model, right so that you are set up for financial cysts. Dane Ability that matches your goals and gives you the head space to build a really strong community will review your pro forma help you with product mix design, sourcing furniture, working with vendors, getting your marketing systems down, hiring the right team or learning to run the space yourself and getting you set up with the right tech and more. Now you can absolutely piece a lot of support together from the podcast and the everything coworking Facebook Group.

00:03:13 This program is for people that want to invest in access to a package that provides the information resource is and support you need when you need it in the order that you need it and accompanied by individual access to me, other industry experts and a curated peer group. So if this sounds like a fit for you, learn more at www dot co working startup school dot com. Make sure if you're interested, you go to that link WW dot co working, started school dot com and hit the notify button because I don't like to over send e mails to the general mailing list.

00:03:45 So if you're interested, please get on that specific list. Okay, now on to our interview with Dan, I am sitting here this morning. It's a little early for me, but not for Dan's Akai CEO and co founder of Mind Space. He is based in Israel, and he has a crazy travel schedule, and I can't wait to hear what's happening with the business. Dan, thank you for joining me today. Thanks for having me, Jamie. Yeah, it's great to sit down and we didn't do a lot of preach out because I know you're on a clock today,

00:04:18 but we have not gotten to really connect, and so I can't wait to hear your story. And here a little bit more about mind space and where you're going. So your co working face brand is a global boutique Coworking Space, with locations in Tel Aviv, London, Munich, Amsterdam, London and more recently, San Francisco and Washington. D. C. Tell us the mind space story. What was your co working moment? How did you come to start mind space? Yeah, sure. So,

00:04:48 yes, My space is a global batik, flexible workspace provider. We have 30 locations across seven countries, mainly in Europe, but also Israel and the U. S. As you mentioned, were highly focused on providing premium experience to coworking users and flexible workspace users across those seven countries. We started the company about six years ago from Tel Aviv. We then grew the business to Europe and most recently have launched our two spaces in the US in San Francisco in Washington, D. C. I guess my co working moment wasin the early days of the company when we launched up for a space here in Tel Aviv.

00:05:33 You know, back then, six years ago, coworking was not what it is today. It was a way more basic offering and product that what we're seeing today. And we took a leap of chance and brought in. We were the first co working space in Tel Aviv, the 1st 1 as you know, cool working spaces today. So before that, it was on the small space says, with flexible workspace with workstations and a coffee and a WiFi. So we took it to a whole new level prime location in the heart of Tel Aviv,

00:06:05 which is the tech CD. And, you know, a few weeks after we launch a space, we started filling it up so quickly we had members coming in getting the space 100% occupancy, which was great. But what was even more impressive was the fact that, you know, I was running the space on my own, wanting to make sure that I know what is going on. And I had just so many people coming to me, saying, You changed our lives in the past, we used to work in those cubicles or coffee shops.

00:06:34 And, you know, I think at that point when we have a space that was 100% occupancy in the heart of Genevieve with such a high member satisfaction. I do. We nailed it, and I knew that this was the right place to be at the right time. Dan, what did you do before? Coworking? What was that sort of pain point for you? That you saw that opportunity to create a space that was kind of up leveling what was available at the time? Yeah. So before mine Space was a co funder off Solar Energy Company,

00:07:04 one of the largest solar energy companies in Israel today. And prior to that, I was an investment banker with Lehman Brothers and HSBC.

00:07:13 And I think, you know, in all of the places that I've seen before mine space, you know,

00:07:18 I always felt that a work environment should be different. I mean, we all spend most of our lives in the office and back then,

00:07:25 you know, looking at tech companies, the global tech companies that were providing a superior work environment to their employees.

00:07:32 And I thought to myself What? I want to have it as well. And I will make it accessible to have all the Plainview work.

00:07:38 Exactly. You don't have to work for Google Facebook to have a really inspirational work environment. And I think,

00:07:45 you know, my space was too playground so that I stood out to deliver the best work experience for our members.

00:07:51 And basically, whatever crazy idea we have about how to design the place. And what do we want to offer to our members?

00:07:57 We can actually do it. And as long as the members love it and as long as the company see that this is what enables them to attract and retain 10 and then it's a win win situation for everyone.

00:08:08 Dan, you might be the only investment banker that has gotten into co working so far. I don't stereotype investment bankers,

00:08:16 but I have my MBA from the University of Chicago and we produce a lot of investment bankers. They aren't you,

00:08:22 j By the way, I did my Ambien. You did? I didn't know that. We'll have to talk about that afterwards.

00:08:30 I was just thinking I was like, Oh, I wonder if you leave a couple of people that you probably have been comment anyway.

00:08:35 Funny. So, yes, most of the investment makers I know we're not the community types, but the thing you had going for you is true.

00:08:42 that business mindset. I think that's a passion of mine. Is helping people understand the model? Because to your point,

00:08:47 you know, in the early days and even today we get a lot of people who are really passionate about getting into the space.

00:08:52 But don't don't get the model quite right. So, yeah, you'd come from starve and investment banking.

00:08:59 Who did you think you would serve at the time? And has that shifted as you've expanded across 30 locations in several countries?

00:09:07 Yes, I think you know, broadly speaking, our industry is changing so fast, and the challenge is really,

00:09:13 you know, figuring out where we're headed next. And when I started the company six years ago, it was mainly about start up companies and freelancers.

00:09:22 Yeah. I mean, that was the reason why tell Aviv was such a great play have to start the company.

00:09:27 And when sourcing our first location, we went to the heart off the startup nation, which is, you know,

00:09:33 one of the main streets where all the companies are at. So this was purely about startups and freelances.

00:09:40 But as time went by, we started seeing larger companies coming in looking. You know for the same customary experience in the same level of work environment that we were providing only for larger group.

00:09:54 So, you know, over time we started seeing innovation centers by the large corporate and then service's companies.

00:10:01 And I think now we're basically serving almost any type of company from any type of industry, you know,

00:10:07 from companies ranging from 1 to 600 employees across all of our locations. And generally speaking, mind space has a lot of over 40% of our member bases.

00:10:19 Enterprise company's taking larger spaces with us, and I think that's something that you know in the very early days of the company we never predicted.

00:10:28 But as we saw what the market is shifting, we started making the right adjustments to be able to cater for that segment in the market,

00:10:36 you know? So I just toured your space in San Francisco a couple of months ago, and I had not seen one of your spaces yet,

00:10:43 and I think the thing I really loved about it is it's so beautiful, designed, totally, my aesthetic and but so professional and yet comfortable.

00:10:54 Your team had just finished up a member event you could see, you know, logo's on doors to your point,

00:11:00 Fortune 500 companies start ups than when people hanging out in the open space like kind of a good mix for everyone. 00:11:07 But it felt right. It felt like, you know, a beautiful space that was professional but also, 00:11:12 you know, kind of comfortable. And your team, Jack, I think, was Thea community manager who give us a tour was fantastic. 00:11:20 And I thought, This has got to be a real challenge for you operating across multiple countries and then, 00:11:25 you know, especially coming to the U. S. Which is geographically so far away. How has that shift, 00:11:31 Ben for your team? I think one of our biggest challenges had always been How do we localize mind space in every market that we go for? 00:11:41 And luckily, you know, we've penetrated seven countries so far, 15 CD's. Every city is different. 00:11:48 So, you know, the challenge was, how do we create, you know, the right basis. 00:11:53 So we will be able to provide this professional environment that you have felt in San Francisco, and I'm glad to hear that this is what you sense. 00:12:01 But also how do we bring that mind space edge into every location. How do we make it a true boutique location?

00:12:07 Because boutique means it has to be tailored, you know, even to the level of the neighborhood that you're an Esso, 00:12:15 we take you on the design of it. We take inspiration from the place where we launch our locations. 00:12:20 We use local artists, We buy furniture from the local flea markets. And, you know, we studied the history off the place in order to bring that alive in our design. 00:12:30 So design and localization is one thing. But I think that the bigger thing is we created this culture in the company. 00:12:38 Everybody. Although we have 30 or 40 nationalities in the company, everybody's saying that which and that's the mind space language. 00:12:46 It's about how you approach our members. It's about the fundamentals of the company that are then being localized and adjusted based on the market that we operate. 00:12:55 And you know San Francisco or the sea are no different in that sense from Unique or London or Tel Aviv.

00:13:02 You know, the type of members that we cater for large companies, enterprise companies, startup companies, those are all international organizations for organizations that are working around the globe. 00:13:14 So really, you know the same challenge. But luckily we have mastered, you know, overcoming this challenge over the past six years. 00:13:21 Because this is how the company was originally built to make sure that we localize our product for every city. 00:13:27 Yeah, I mean, but 30 locations in six years is zippy. It's business. I mean, you know, 00:13:33 it still feels pretty slow to May. I would want to have more the, says the impatient entrepreneur. 00:13:41 Yeah, but six years is like a blank. I mean, to create a culture and a space that can thrive across those cultures and across countries, 00:13:51 I think is an accomplishment. There are not that many brands operating internationally today. You know, when you look at it especially,

00:13:59 you know, 30 locations. So I'm curious because you have that lens. How is the co working sort of market different in Europe than it is in the US right now? 00:14:09 Well, it's not very different, and I mean, comparing the U. S to Europe generally, it's pretty difficult, 00:14:16 I think, you know, we operate in Gateway cities in Europe as well as in the U. S. 00:14:22 O. You know, the things that you see in prime cities in Europe and prime cities in the States are pretty much, 00:14:29 you know, similar to one another. So the localization, the adjustments that we have to make regardless of whether it's the U.

00:14:36 S. Market or European market. You know, the one thing that we are seeing in which takes me probably to an expression, 00:14:43 is we came into the U. S. Market mainly because of the landlords advanced thinking on this market. 00:14:50 So what we are seeing that is different in the U. S. Market is landlords perception about the industry. 00:14:57 So I think US landlords in general, understand that Coworking is here to stay flexible, Work speaks, is here to say, 00:15:05 and to take a meaningful chunk off the office market in general. And they want to take Maur active role in this transition. 00:15:13 And so, you know, mine spaces right now in advance discussions on partnering with landlords, you know, 00:15:19 they provide, you know, flexible workspace management in the portfolio. So I think again, that's the biggest difference that we're seeing between the two markets.

00:15:29 Yeah, that's interesting. I mean, even in the u s is you're seeing. Certainly the institutional landlords are getting there. 00:15:36 The market is so fragmented. The commercial real estate market. So in smaller cities, that is not always the case. 00:15:42 But yeah, progress and a good progress for the industry. Absolutely. And there are not again. You're just in such a great position. 00:15:50 They're not very many operators who are well positioned to partner with landlords, especially across geography is you know, 00:15:56 a lot of folks just don't have that experience yet. They've been really regionally focused, so I agree. 00:16:02 And I think that mine space is well positioned also, because all of our track record so you know, 00:16:09 we're profitable company are spaces are running at 93% occupancy. So the company is doing great. And I think that, 00:16:17 you know, what landlords wants to see is an excellent customer experience, which we have. But also, 00:16:24 you know, it needs to support the fundamentals of the visit. It has to work when it works for us. 00:16:29 And I'm happy that it does, because now we're in a great moment, um, to pick it up with landlords.

00:16:34 I mean, the other advantage you have when you've done 30 locations is the adoration, right? Like your San Francisco space, 00:16:40 right? Amount of phone booths, you know, amenities on every floor. Like, and you're by the way I have to. 00:16:45 I was probably driving Jack crazy when we were doing that to her. Your coffee machine on every single floor. 00:16:51 I was like, You're kidding me. You know, I get the sense that it's part of your brand. 00:16:57 Thio, you know, offer this kind of high end amenity and make it easy to get to you and easy to access for folks. 00:17:03 And I was envious of the coffee machine and on every wall you're welcome for coffee any time. So you expanded into the US fairly recently.

00:17:14 San Francisco in D. C. Rear 1st 2 locations here in the last couple of years. So 2019 was a pretty interesting year for co working. 00:17:22 So what's your take on on? What does the industry look like? How well things develop in 2020. 00:17:28 Yeah. So 2019. Definitely an interesting year for the industry. That's got a lot of attention. Yeah, 00:17:35 very recently. You know, from my space perspective, we had the best year we've had ever. We doubled our revenue. 00:17:42 We took the company to profitability. Our entire portfolio is profitable. So a very good year for mine space. 00:17:49 I expect 2020 to be even better for mine states and for the industry as a whole. I think that, 00:17:57 you know, demand for coal working and flexible works. This is not going away. It's just growing.

00:18:03 You know, we're in discussions with our tenants, with our enterprise customers, with our members on the dating basis. 00:18:09 We know what they feel like about our spaces. We measure, you know, their level of satisfaction. 00:18:14 And we know it's just the beginning and you're seeing markets such as London, New York, in which flexible workspace is already taking a meaningful chunk of the market. 00:18:24 And our prediction is that other markets will follow the same pattern. So and if you look at it, 00:18:30 it just means that you know the pie is a hole is going to continue to grow. And you know, 00:18:36 our aspiration is to take advantage of this continued growth in the business. And I think one of the most interesting opportunities in the market takes me back again to the handle partnership structures that my office is now pursuing.

00:18:50 We have this new offering for landlords. We call it mine Stressful landlords. So, in fact, what we do is we partner up with landlords and we offer them, 00:18:59 ah, full package in managing their flexible word space and amenities in their building. So if you think about it, 00:19:06 we have a team on the ground. We've been doing this for the past six years making sure that customer experience is the best possible for employees in buildings. 00:19:16 And whatever we do here for mine space members, we can do for other tenants in the building as well. 00:19:22 And so, by partnering up with an old, we not only offer them, you know, higher income than what they would get us the rent, 00:19:29 but we make the whole building more attractive as a whole. So in the past few months we have signed a few of those partnerships were targeting a lot more for 2020. 00:19:40 So I think it's gonna be a great year. For the end of say, I think it's gonna be a great year for mind states.

00:19:44 I also think that due to the recent developments in the industry, we're going to start seeing, you know, 00:19:50 the quality operator is taking a bigger piece of the pie. Yeah, unless newcomers coming into the industry because it's becoming all about expertise and execution capability is right now. 00:20:02 Yeah, and I think for the enterprise customer, you know, with my G w a hat on. 00:20:06 I have those conversations and they're trying to understand, right? Who are the operators? You conserve their needs across geography, 00:20:14 ease and internationally. And you know what we talked about earlier? They're just that takes a special Well, 00:20:20 it takes funding. It takes, you know, years in business. It takes expertise and technological capabilities that you know are starting to become unique.

00:20:30 But I think they're also looking for diversity. You know, they're looking outside of the top couple of players for options for their teams on where they can put them and keep their team's happy and keep the technology working, 00:20:42 et cetera. Yeah, I'm curious. You recently produced a research report kind of about employee engagement and wellness at work. 00:20:50 What are some of the findings in that report? And I'm gonna link to that report in the show notes. 00:20:54 So if anybody wants to grab it, there's both the US version and a global version of that report.

00:21:01 But what are some of the findings that came out of that that helped you design and operate your spaces? 00:21:07 Yeah, So we found a direct linkage between work environment and employees happen. So in fact, all of the things that we've been investigating for the past a few years design coffee machines, 00:21:25 meeting rooms, events, you know, activities, benefits. All of those things are directly linked to employees. 00:21:34 Happiness. Now we all know that you know the most important asset Any great company has its their employees. 00:21:40 So if we can show that it has a direct linkage to their efficiency to their happiness retention, etcetera,

00:21:49 I think you know, it's a very big statement. So you know, it's not just about having the best work speaks environment just for the sake of having it or saying it. 00:22:00 It thus create better cos with happier employees. Another point to mention is that, according to our survey, 00:22:08 US employees are the happiest Oh, yeah, I think that's an interesting fact. I thought that was an interesting finding as well, 00:22:15 and I think that'll continue as options. The variety of options and the availability of options for folks in, 00:22:23 you know, major markets and smaller markets continues and, you know, kind of to your point as operators become more sophisticated in their offerings. 00:22:32 Because even as recently to your point as you know, six years ago, when you first came into the market,

00:22:38 the sophistication of design and kind of understanding some of these key drivers was just not necessarily there. For the operators. 00:22:45 There was a passion for providing space and bringing people together. But it's not as simple as that, right? 00:22:50 There are so many factors that go into designing a space that's both attractive for the user and profitable on the back end. 00:22:58 So it seems like you guys air finding that sweet spot. Yes, definitely. And again, every market is different. 00:23:06 Every market has its own requirements. We spend a lot of time figuring out what do the members in Berlin you know are looking for versus members in London or San Francisco. 00:23:19 So, you know, different tastes required different planning and different design aesthetics. But you know, that's his challenge.

00:23:27 And that's why were so passionate about this business because it's never easy and from our perspective. It's not a cookie. 00:23:34 Carter. We need to nail every place to make sure that when a member walks in, not only they have, 00:23:41 you know the right work environment for them, but they're also excited. But what we're doing and they feel the fact that we have made it especially for that, 00:23:50 so I can totally relate. And at the beginning, you know, we spend hours and hours with our members to figure out What are they looking for? 00:23:57 What should we do and what shouldn't we? D'oh! And now it's a lot of it is about data. 00:24:02 We measure efficiencies. We measure what members are looking for, what works better and what doesn't so constant improvement and development as the market is being. 00:24:13 You know, Maur demanding and competition is rising. So you have to be on the top of your game constantly.

00:24:19 Yeah, although that's another benefit of scale. When you have 30 locations, you can capture data and you can get sort of meaningful insights and iterated and, 00:24:28 you know, make improvements over time. So it sounds like you have a busy 2020 coming up. What can you give us a hint on your next locations are top secret US expansion. 00:24:40 European expansion were working. Ah, a lot of deals right now, which we hope will come to Fruit very soon. 00:24:50 Nothing to announce it, actually something very soon coming in. But I can't disclose in this thing, but I can guarantee 2020 is going to be a very exciting year. 00:25:00 Mind space. We hope to grow. But you know, it's not just about growth. It's about making it right.

00:25:06 It's about, you know, having locations that provides, you know, an excellent work environment for tenants, 00:25:14 for our members that will be able to grow with us. It's about having a profitable and responsible growth. 00:25:20 So we want it all. It's not just about growth, but growth is definitely, you know, one of the exciting things that we hope to achieve this year. 00:25:28 There's the Chicago M B. A coming out profitable growth, not just growth at all costs. I love it. 00:25:34 Yeah, exactly. Chicago. So, Dan are Conference is in D. C again this year. We don't usually repeat cities,

00:25:44 but D. C was a great city and just a great location for our attendees. So we hope we can put your location on our tour list so that we could give folks a chance to peek inside. 00:25:53 Who haven't seen one of your locations. Definitely, last year's conference was great, and I'll be happy to attend again. 00:26:00 Good. Awesome. Oh, yeah. I was in my notes to give you the dates when we're done, 00:26:05 but we'll do it live so that everybody can mark their calendars. It's September 23rd through the 25th. Got it?

00:26:12 Yeah, you you get exactly. No, Dan, I know you have a flight to get to you, 00:26:17 but thank you so much for sharing your story. And I think there are a lot of folks who are just getting to know mine space. 00:26:24 And clearly you're a force. And I look forward to seeing your progress over the next year and hopefully seeing you in D. 00:26:30 C in September. Definitely. Thank you very much, Jamie. It's been a pleasure. Thanks for joining us on this episode of everything co working. 00:26:39 Be sure to click the subscribe button so you can stay up to date on the latest trends and how to use until next time

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Jamie Russo