218. Ben Wright shares data on what happened in coworking in Q2

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218. Ben Wright shares data on what happened in coworking in Q2

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 coworking space owner and trend expert, Jamie Russo Hey, before we dive in, I want to share with you an upcoming cohort for our management agreements course, which we call creative coworking partnerships. If you're a landlord or a coworking space operator,

00:00:40 looking to get into a creative partnership structure, to put a coworking space in a building that has the right upside for both parties, while being confident that you've covered all the who does what and what ifs before you commit, then, you know, you need to become an expert on the coworking management agreement. I've partnered with management agreement, expert Mike Abrams,

00:01:07 to develop a course that covers structuring and negotiating management agreements and other creative partnerships from a to Z. If you're a coworking space operator looking to expand through a creative deal structure or a landlord looking to offer flexible workspace in your building, and you want to understand management agreements from both a strategic perspective and a tactical perspective, we designed this course for you. We have run this course twice.

00:01:36 Now with cohorts. We like to launch it in cohorts because we think it's really helpful to do the Q and A's with other operators in landlords that are working through deals real time. So you can access the course at other times of the year, but the next cohort will start on September 13th. So if you'd like to jump in, you can get all of the details at everything co-working dot com forward slash management agreements.

00:02:05 The course is online. So you can access the modules at your own pace, but we run Q and a calls every other week so that you can process what you've learned and get access to Mike and myself to ask questions. And do you break out to the other folks in the group and kind of learn from others. You also get access to all the Q and a call recordings that we've done either on video or on private podcast,

00:02:32 if you'd like to listen to on the go. So if you have any questions, you can find all the details at everything co-working dot com forward slash management agreements. Welcome to the everything coworking podcast. I am your host. Jamie Russo. Thank you for joining me today. Today in the podcast is Ben, right? Ben is now the head of flexible office solutions for a digital first brokerage called a square foot up suite,

00:02:59 which was the company he founded was acquired by square foot. So the reason I love talking to folks that run platforms like up suite. So upsweep is a marketplace to help end users find workspace mostly in north America today is that those platforms have a lot of data. So he has pricing data, transaction data, you know, length of agreement data. So while I talk to hundreds of operators every month through my programs,

00:03:30 getting a lot of qualitative data and some actual data, the number of data points that he gets is much larger and really tell some stories about what's happening in the marketplace and he loves to share those insights. So today we talk about a number of things. They issued a report that illustrated some of the trends from two, two, and what that recovery started to look like some projections around what's next,

00:03:58 in terms of recovery in different markets. We talk a little bit about segments of users, some insights he has around what end users are typically, what mindset they're in, when they're looking for traditional space versus flex space. And we talked a little bit also about kind of moving from like really early innovator to more of a broader market of early adopters for flex and,

00:04:25 you know, kind of what they're looking for and why they join a flex space and how that can help you. He also shares some insights around managing leads, so up suites goals to bring workspace leads to operators, and then the operators have to close those leads. So he shares some good kind of tidbits around when that doesn't work so well. And some of the opportunities that you have to just make sure that is super tight as we move further into recovery.

00:04:52 So appreciate Ben's time to share these insights. I think you're really going to enjoy some of the macro perspective he shares and some insights kind of getting into the head of our end users. So enjoy my conversation with Ben. Welcome. I am back with a repeat guest and Ben, I don't have a lot of repeat guests and you were recently on the podcast.

00:05:13 And so we connected. You've had some updates since we last chatted. So I can't wait to talk. There's a lot of things on the list that we want to get into today. So Ben w you'll have to update me on your kind of updated title was the CEO and founder of upsweep. He had a recent acquisition with square-foot. So we'll talk about how that's going.

00:05:35 We're also going to talk about some data that you've published on Q2 performance in the flex industry. And you've also mentioned, which I think is really interesting, but you're learning a lot about the behavior of traditional office customer versus the flex office customer. So I want to talk about that. So I appreciate you being willing to share your insights and taking the time to do this.

00:05:55 So thank you for hopping back on again, My pleasure. It was really fun last time, and hopefully we'll have fun again today. Totally. Yeah. And I'm sure I said this last time, but I was looking through your report and I think the challenge with this industry is, you know, like roughly you might know this most recent number, but say 75 to 80% of the market is independent.

00:06:18 Right? So we've got the big guys that we work in the industrial spaces. And then there are a lot of independent operators that are kind of operating in a bubble and they don't know what's happening out there. So I love, I talked to a lot of operators and I try to emphasize, but I'm getting somewhat qualitative, you know, data in my programs.

00:06:38 I, you know, I talked with, you know, a couple hundred operators every single month, but I love looking at your numbers. So let's start first with your Q2 data. And then we'll kind of talk about your transition, but yeah, I mean, you have this unique, you're, you're pushing things out really quickly, and I love that you have kind of the most recent what's happening and it may be that things are shifting,

00:07:03 you know, even since then. So I'd love to hear your perspective on Delta variant and whatnot, but yeah. Tell us what you found in your, in your Q2 study. Yeah, well, great. Happy, happy to, and, and I think some of the most interesting things we were looking for, and, and, and to, to let you know a little bit about the data that we collect,

00:07:24 it's, it's demand data, pricing, data closures, new locations for about 2,500 locations. And that's 2,500 verified locations in our database. We have roughly 4,000 all in north America. And I was like to say that because there are a lot of your listeners that are outside north America and, and it's from about 350 different operators. And, and you might say,

00:07:52 we hear this a lot. Oh, aren't we work in Regis kind of all, you really need to know now you really aren't. And, and I think those two are the two biggest and the two best known, but together they make up, you know, roughly a third or so of, of the market that we see. So, so what,

00:08:14 what we were looking for in Q2, obviously just to kind of take us back a few months was when the quarter started code was still, there were a lot of places on lockdown. I'll give you an example. Canada stayed on lockdown until the end of Q2. So we're talking about a market that was effectively, I've worked with some operators pretty closely in my coaching program that are in Canada and we would get on the phone.

00:08:40 I just would be like I out still. Yeah. When the quarter started also there, there were a few cities that had already had kind of a woken a little bit. The first in the, that we saw in north America was Washington DC when the election finished in Q4. And there was that kind of a changeover of, of the guard and in Washington,

00:09:04 DC, that was really the only market that we say saw a lot of activity in, in Q4 and Q1. It was markets like Houston that started to kind of really grow. But then Q2 is just when, and it was almost vindication for some of the cities that then markets that, that people thought were, were dead or, or would never come back.

00:09:27 I'll give you an example. We found that demand for flexible office in New York city alone in Q2 rose, almost 83% compared to Q1, which is just remarkable. And any, any of you, any of your listeners that were spending time in New York could tell that it was coming back. You know, that the, the qualitative information that we had, or that the trains were filling up and that people were coming back to the city and moving back,

00:09:56 and, and that really showed in the flex market, in a market like New York, another city that people have said, well, maybe its days are numbered Los Angeles. I saw that in your report. And I thought the same thing I thought, huh. And, and it's interesting because it's not every, we also look at some markets. So I'll give you an example in New York first,

00:10:18 like Brooklyn is an incredibly hot market for flex. It's just really amazing, cause it's a 5 million person city in its own, right. But it's also not in the center of, of, of everything. And I think it's, it's a great market to be in Manhattan though really did come back also in Q2, they didn't don't necessarily move the same way in LA it's even more pronounced downtown LA pre COVID was a really difficult market for a lot of operators who a lot of national operators went into downtown LA thinking.

00:10:52 It behaved like downtowns and other major cities. And it doesn't a lot of the demand and growth in flexible office in LA is this Hollywood Culver city kind of west of west of downtown. And so we saw that market really, really explode as well. And there, there are many other markets there too. So I think one of the highlights was, you know,

00:11:15 Hey, flex, isn't dead. The office market isn't dead and cities aren't dead would be the, would be the, the highlight. And then, and of course, and we'll get into this later. But you know, as, as the Delta Varian and other things come back COVID is still a thing, right. And it's still a thing and in a lot of cities,

00:11:36 but it doesn't impact every market or every operator the same way. So you mentioned in the report or return of demand, but also mentioned the return wasn't necessarily strong enough to get operators back to profitability because the occupancy wasn't quite there and you mentioned like a 70, 75% or 70 to 80% occupancy, sometimes it's 85%, you know, required to be profitable.

00:12:02 I think it really depends. And we probably talked about this last time, but the sort of disparity between spaces with offices and open space, right. Cause the occupancy on, you know, more of a hot desk model has to be really high to hit profitability. And so that, I think probably a, a big challenge. So would you say demand is returning,

00:12:27 but not totally out of the woods in terms of, you know, you mentioned sort of operators being cash poor. I think might've been the way the way. Right. Right. And, and this is going to sound really familiar to all of your listeners, right? So, so just because demand comes back, meaning that's shopping behavior, that doesn't necessarily mean that that's signing behavior.

00:12:48 Although we are seeing just as much growth in signings and, you know, and, and the operators that, you know, we track discounts pretty, pretty heavily in Q2. There was, there were definitely a lot of discounts, for example, in, in New York on the transactions that we did in New York discounts were, were ranging between 25 and 45% on,

00:13:10 on longer-term deals. That's still, that's a lot of discounts and it's hard to make money doing that. And it's, and that's in spaces that we're still not close to that kind of 70, 75, 80, 80 5% occupancy. So, so that those challenges are going to continue. But what what's new here is a few things that, that overall demand is, is returning.

00:13:33 But demand for profitable members is returning to meaning the four seats, six seats, the teams and, and why those are profitable because they can really large teams are problematic for your listeners. Because if, if they're there, they're great. If they leave, that can be really painful. So we've always built our business around that kind of bread and butter four to eight seat team that is going to stay for 12 months.

00:14:00 They might even renew for longer. They pay what the, you know, they, they pay on time. They, they like it there. So that's a unit that I think is really important to the industry. And it's that, that, that returned in Q2 across almost on all markets with the exception of, of Canada than in north America. So,

00:14:20 so that's a good thing. And that's a market that COVID really hurt because no employer was going to say, Hey, let's get all of this back together every day in the middle of a pandemic. So, So I'm curious on the discounting front, and you probably don't have data on this, but I'm interested in your perspective. So bill Bennett wrote a piece on LinkedIn about WeWork's financials,

00:14:42 did You? That was great. So he Was kind of inferring pricing that we work with doing some significant discounting on their per seat price. Like they were in the 300 range and I would expect them as he wrote in his article to be closer to 700 for office, right. Cause they're 90% office space. Right. So that their office seat would be much higher.

00:15:09 Is that, you know, is that re like, do they have a, who, who were they discounting to that wasn't willing to pay? And do you think that shifting, like you mentioned this, you know, four to six seat, you know, company who comes in, they expect to pay, you know, full price, maybe there's some discount for a longer-term agreement or whatnot,

00:15:27 but do you think there was some, w w is that going to shift? Will that, will, can they come back from that and or maybe why were they doing it? Were they selling to a different client that just simply wasn't willing to pay? That's a great, so that I'm going to give you a multi-part answer. Cause that was a multi-part question.

00:15:50 So first of all, the, I think what, what some larger operators like we work are doing, including we work with their discounting is they're saying, look, we're not going to discount the monthly rent on the long-term deal. We're going to give you some element of Fremont somewhere between one and three months. But when you start to pay, you're,

00:16:07 you're essentially going to pay the full rate for that month. And what they're doing is they're training up there, they're training up their, their member that when renewal time comes, they're used to paying that monthly amount. So the one to three months of, of discounting I think is, is really smart. The way we present it to clients is, look,

00:16:26 we'll just, we're going to tell you where, what you're going to pay on average over the 12 Month average And, and that, so, so that's a, a very smart approach. You know, obviously they're discounting for longer term agreements, you know, discounting like that on a month to month agreement is, is you being a former operator? You know,

00:16:45 that's, there's no winning with, with that, with that approach. So, so it's gotta be longer term agreements who they're doing it for anecdotally, you know, the larger, the suite, the, the bigger, the discount. What's interesting on that though, is the asking price we saw, which as, you know, we track us asking prices by size of suites,

00:17:08 one, two up to 10 plus and asking prices on large sweets tended not to fall during COVID discounts are really what, what fell on those large suites. And, and I think the rationale was that, you know, it's rarer to find teams for that large seat. So once you have them on the hook, you'll, you'll tend to discount them another way of saying that is asking price for a large suite,

00:17:38 almost doesn't matter as much as the end kind of negotiation. So, so that was interesting. We, we saw discounting during COVID very much on the kind of the dedicated desk and the, and the hot desk level from an asking price perspective, more so than, than the really large suites, but then the discounts really come in on the large suites.

00:17:59 So I think I answered two of your three points, but hopefully we've got close. Well, I'm curious over the longterm. I mean, so you're talking about kind of like that, that, that discount rate is like a, maybe a blended rate, but that still matters. Right. So will that continue or do you think the discount, even as a blended rate will that the,

00:18:24 the effective price will move higher? Yeah. So let me, I'm going to fast forward to, to kind of how I see the market returning and then circle back to discount. So, one things that was really interesting in Q2 early Q3 is we actually found some sub-markets that don't have any availability in north America. And that that's a welcome site for,

00:18:47 for operators, but I'll, I'll give a little bit of more color on that. Are you selling That data for a premium? No. I mean, I'll tell you who it is like, like north Austin, which is where, you know, companies like there, they're just so many companies moving to, to that market. It is great to be an operator there right now,

00:19:07 and in a market like that, where you've got, you know, 90 plus occupancy across the market, that gives you a lot more pricing power. And so you don't discount it as much, right? Cherry Creek north in Denver is another one of those where, where that market is basically full right now. And, and that's rare. I mean,

00:19:31 that, that, that is very rare, but I want to remind your listeners that to get full, there are 25% fewer locations than there were pre COVID. Right. So, so what that, what that basically means is it's, it's almost like, you know, those markets are back to kind of where we were pre COVID, if everybody was 75% full.

00:19:55 Right. So, so what, I'm, what we're really expecting. And again, the variant throws a wrinkle into everything here and COVID does, but I'd say without the variant, there would be a large number of markets where the co-working flexible office inventory was full by the end of the year. It's partly because supply has gone down and demand. So,

00:20:23 so that, so with that said, discounting is, is directly proportional to your pricing power. And, and so the behavior that we would see as, as, as the recovery moves on, on, you know, some operators have been offering three free months on a 12 month deal, they'll move to two free months, they'll move to one free month.

00:20:43 Then I moved to no free months. And they're asking prices, especially on the large suite size really won't have changed. It's their discounting that will change. Sure. Okay. That makes sense. So your report does some forecasting, like Chicago is a market that I took notice of. How do you, so yeah. Talk about kind of what you see in a couple of those markets and,

00:21:07 and how do you do that forecasting? Yeah. So you may not know this, but I I'm a recovering economist. Did I tell you that last time, I, I, we talked a little bit about your background, I data nerd, for sure. I knew, but Yeah, so it's actually a regional economist early in my career. And I won't say how long ago that was,

00:21:28 but, you know, our, our forecasts use things like demand. They use supply and, and the types of things that we, and, and they make some estimation about kind of occupancy dynamics and, and, and, and things of that nature. A few things that I think are really important just about present day. And then we'll talk about current day is that yes,

00:21:54 demand is rising like across north America, it's up 41% quarter over quarter. That is a huge growth rate and, and shows that there's a lot of interest in the sector. There are still more closures than new locations in, in Q2 that that's, that's really, really important. There's some markets where that started to flip, like in New York, there are more new locations than closed,

00:22:21 which I think is, is, is really important, but that is that's rare. And so what what's happening is demand is coming back before supply is coming back. So that's going to create a shortage at some point. And I, I hope that the industry starts to learn is flexible. Office is just that like, like, and, and we should kind of get used to it COVID is a shock that we hope we don't go through too many more times,

00:22:51 but it can teach us a lot. So, number one, like if there's a big shock like that, people will take advantage of their flexibility and leave, right. And that will, that will be a challenge. But then when the market comes back, we also need to be so, so we need to be ready for the downward, but we need to be ready for the up,

00:23:10 up as well. And my fear is that this sector may not be ready for the up. And, and we see that in a number of sectors. Now, if anybody, any of your listeners have flown on an airplane, stayed at a hotel, eating at a restaurant. These are sectors that have not been ready for the return of demand generally.

00:23:30 And I, I fear that, that this industry could be the same. Now, certain things may, may extend recovery or, and, and push it back into the future, but that we're already seeing signs of that in, in particular, in things like is my sales team staffed up is my pricing model and my, my discounting strategy ready to go.

00:23:52 Yeah. And dynamic enough to do your point to respond to the demand in a timely fashion. This is, this is a really kind of really basic one, but certain large operators. I mean, this industry, and you know, this a lot, this industry has a fair amount of turnover and, you know, and, and among salespeople or community managers,

00:24:16 it can be 25, 30% a year in terms of what we've seen. That's been even more, the turnover has been even higher in the last three to four months in the sector than that. And so what that means is, is if you are, you know, we're not the only supplier of, of demand and new tenants, but if your sales team is turning over and you're not reconnecting with your sources of demand,

00:24:41 or you're not passing those leads off sales person to sales person, you're going to lose them. And so I think, I think that's to draw a corollary or parallel between co-working flexible office and the sectors, we're all experiencing in recovery that are kind of struggling. Don't let that happen to your business or set another way. If you can solve that problem,

00:25:05 you're going to be ahead. Are you seeing some, some gaps in execution when you're trying to send leads? I remember early in my GWA days, we did an exercise where we had a contractor from Upwork call 300 coworking locations and track, which ones picked up the phone, 30%, you know, a third of them answered the phone and I was like,

00:25:32 that's a lead, right? You just didn't pick up. I mean, it wasn't the lead, but it could have been a lead. And so that's a real basic example of what I, what I think you're talking about here is probably weed management overall, and are things falling through the cracks as team turns over, Hey, I just wanted to jump in really quickly before we continue with our discussion.

00:25:52 If you're working on opening a co-working space, I want to invite you to join me for my free masterclass three behind the scenes secrets to opening a coworking space. If you're working on opening a coworking space, I want to share the three decisions that I've seen successful operators make when they're creating their coworking business. The masterclass is totally free. It's about an hour and include some Q and a.

00:26:17 If you'd like to join me, you can register at everything co-working dot com forward slash masterclass. If you already have a coworking space, I want to make sure you know, about community manager, university, community manager, university is a training and development platform for community managers. And it can be for owner operators. It has content training resources, templates from day one to general manager.

00:26:43 The platform includes many courses that cover the major buckets of the community manager role from community management, operations, sales, and marketing, finance, and leadership. The content is laid out in a graduated learning path. So the community manager can identify what content is most relevant to them, depending on their experience and kind of jump in from there. We provide a live brand new training every single month for the community manager group.

00:27:12 We also host a live Q and a call every single month so that the community managers can work through any challenges that they're having or opportunities get ideas from other community managers build their own peer network. We also have a private slack group for the group. So if you're interested in learning more, you can go to everything, coworking.com forward slash community manager. Here's something I can share.

00:27:37 And I won't name names, but, but even pre COVID, we, we stack ranked operators in terms of their ability to close on the leads that we sent to them. And, and within the top five names that everybody knows that the low close rate was 5%. The high close rate was 40%. And so talk about the D these are from well-staffed well-paid leading operators.

00:28:04 The variants of their ability to close was in that case eight X that hasn't gotten any better. In fact, that's probably worse during Cobin and you meaning the variants and Feed that data back to them. Are they, are they aware of that? Oh yeah. And, and the one that was the lowest is now actually moved way up. They've made a real,

00:28:28 they ma they made a real concerted effort. They actually turned over their entire sales organization from top to bottom and they fixed it. So that's a real, that's really good news, but in a time of turnover and change and everything that, that everybody's going through, that that's really something to watch. It's a, it's a real execution issue W yeah.

00:28:51 Which is super insightful. There's so many things that you have to get right. In this model, location designers, you know, that your product mix and then there's manage the leads. I mean, yeah. And I, yeah. So I'm curious, you talked about, well, let's talk about your briefly, your, your transition into square foot.

00:29:16 And then I want to talk about the insights that you see, you know, you've mentioned in our pre-chat between traditional office behavior and flex office behavior in terms of demand during this time. Right. That's, you know, an official congrats on, on the acquisition. And, and I assume this means like some exciting resources for your team to be able to run it what you want to run at.

00:29:40 Absolutely. Yeah. So since you and I spoke, I become the head of flexible office solutions for square foot. That's a digital traditional brokerage and have brought up suite and the whole up suite team into a square foot. And there are a number of reasons that, that I did that, but the, the most important one was that there's a great team.

00:30:04 There, there's a great vision there, but kind of two key things. Digital first that's a digital first company that, that believes that we're in the early stages here of a massive digital transformation and commercial real estate. So we very much aligned that way. And we also aligned that we wanted to have not just a great source of demand because that's whatever you,

00:30:28 every operator wants. And every, every owner of real estate wants is lots of new new clients and tenants, but also a real breadth of supply solution. So I'll give you an example, what, what square foot operated is, is really a highly, highly successful nine-year-old digital brokerage doing traditional real estate deals. So, so five-year leases and three-year leases and ten-year leases in the cities that they operate in,

00:30:56 what flexible within square foot means within my purview is co-working direct to landlord flex, which is a really exciting new opportunity that we're developing now, but also shared shared desks. So, so I run a property called pivot desk as well, which is tenants can post their own space there that we will then introduce to square-foot and up suite clients. I don't know if I remembered that that's where did they go immediately to score a fight?

00:31:31 Did someone else acquire them? They went to industrious first, Definitely passed him over. Yeah. And David Mendell, the founder of pivot desk has been on up suite's board throughout and been an advisor. So, so very familiar, but that's, so that's what that's, that's what square-foot is really investing in. And, and so I think that the,

00:31:58 and this is a great, what I think what I think I, and we are going through as a flex first company, going into a traditional first company is I think a real central challenge for the flexible industry, which is how do we convert more and more people who are already in traditional offices to go flexible. Right. I think there's a, something that happens in every market where early adopters come in and,

00:32:23 and there's a certain fervor about, Hey, it means something for me to go into work early, right. Or it means for me to go something to me, to go into this new kind of Concept, I'm a founder that's focused on the business, right? Let somebody else handle the real estate. And there's some right pride in that perspective. So where,

00:32:46 where I believe the market's going is isn't from the kind of enthusiastic early adopter stage, which is early adopters are people that say, well, I'll do something new. If it's a better solution for me, like if it's cheaper, better, faster, my employees like it better. And so we're really uniquely positioned to introduce flex into a whole stream of,

00:33:08 of companies that are looking at office space in general. And my, the CEO that I worked for Jonathan, Wasserstrom says this. He says, people come to us looking for office space. They don't come to us looking for a long-term lease a short term, lease coworking, they're looking for office space. And so we're in a really unique position to present a range of solutions to them,

00:33:31 and really learn from their preferences, which is, you know, what you and I talked about right before we hopped on. It's super exciting. And we could talk about that. And next time I want to talk about the landlord inventory. So we'll be making notes for our next chat. So, yeah, I'm really curious, you talked about some insights around the differences between traditional office users and flex office users.

00:33:57 What, or what have you seen? So, I mean, I think the, what, what I, I mean, still the, the vast majority of the market is traditional meaning 90, 95 to 97% of office tenants are in a traditional lease where they go into and it's just their company. And, and so there are a lot of preferences that they really like,

00:34:22 like, and, and most of them don't have to fit the bill for fitting out the space, furnishing the space, cleaning the space, providing internet. So they're, they're used to all that being there. And they're used to, I think most importantly, having it be private to them like, Hey, this is my office, or this is our office.

00:34:40 So introducing flex into a stream of, of kind of traditional tenants and traditional members has been a really eye-opening experience because we're not selling the, the zealotry of, of coworking. Right. Right. It's not community first. It's not. Yeah. That's super important. Yeah. What, what ends up being true and most impactful by far is location like by far and,

00:35:10 and it's, is it an a, is it easy to get to, is it on a train line that I need? Is it, does it have easy parking, right. So that, that's still number one. The next, the next thing is, what's the environment I'm going to work in. And what's my role in creating it, that,

00:35:24 that I think is a really interesting one. And, and what, what we've boiled that down to is how private is it and how private do I want it to be? Will I take on the creation of a unique work environment for my company and my company alone, and how good do I want to be at it versus am I willing to share some of it to go into something that's maybe a little nicer,

00:35:47 maybe a little more modern that's already done for me. And I think those are, if you phrase it to a tenant like that, they start to really open up and, and, and talk about that. And, and like, many of us, I bought a, I bought a second home recently and, and it came totally decorated, totally furnished down to like the silverware and the plates and everything plug and play.

00:36:13 And I'm like, oh my God, this is great. And I think there's a certain element to that, that we're all getting more and more comfortable. It's like, just make it move in. Ready. And yeah, I'll pick the things that I, you know, really care about. Yeah. Right now I might make some small modifications, but if I can just show up and my team can just show up,

00:36:35 that feels really good. Especially if it's professionally designed to, as some of the flexible spaces are. So, so privacy is kind of one part of that. And the willingness to share. The second thing is really a funny thing. And, and my colleagues at court and branch and other places, I think we'll re react to this one, which is furniture is,

00:36:54 is something a lot of people don't want to deal with. I was talking to a colleague yesterday who who's has mapped out the math of why a building owner should also own the furniture. And it's pretty compelling, like for, for a tenant to spend a lot of money on something that nobody wants five years later, there's actually not a way for that to make economic sense.

00:37:17 And so, so I've been really surprised by how many companies just want to avoid the furniture problem altogether, and we'll choose an office configuration based on, is it furnished or not? And so, so that's been, it's been honestly, really, I I'm, I'm a pretty curious person. And I think it's really piqued my curiosity to say, huh,

00:37:42 this is making a lot of sense as we, we, we work with about 50 new companies a week, and that with that kind of volume across those different markets, you can really see trends. And, and those are two that have really stood out. So you also mentioned sort of a mindset difference between traditional office returning and like, you know,

00:38:06 maybe early adopter, flex users returning what's there. I think it comes down to office as a practical choice versus versus office as a, as a symbol of, of you know, of your identity. Right? And, and I think there, there, there will always be people who are the first to get stuff, and there will always be people that are more practical decision makers,

00:38:33 but who are, they're not late adopters mean they'll build, they'll take some risks, but it's gotta be a calculated risk. And, and that latter group is just a bigger group. And so what's nice about that group. There, there are pros and cons, right? Like a really early adopter will, will come to your space and they will tell everybody about it if they like it and help you build that community,

00:38:58 the downside is they probably don't, don't pay a lot. Right. Probably don't pay a lot. And they, and they may be one person who's making a personal choice. Right. Whereas an early adopter is much more likely to be an entrepreneur or a team or a forward-looking, you know, for example, even certain enterprises are starting to, to,

00:39:22 to just be super practical about, well, do I really need to sign something? And they're not necessarily super innovative teams or super innovative leaders, but they're basically saying, oh, I don't have to furnish it. I can get kind of nicer space. It's in a location. I want I'll do it. And I think what's nice about an early adopter audience is they it's,

00:39:43 it's much, much bigger, you know, by some estimates 10 times bigger than the, than the, the kind of the, the, the innovators that we were talking about. But they also tend to be a little bit more predictable and pay a little bit more. So, so that's, I think we've, we've dealt more with, we're moving into a cycle where we're,

00:40:04 we're dealing with early adopters, not innovators when it comes to flexible office. How do you think the early adopters are responding to the variant? Do you think? Yeah, that's a good one. Are they more cautious? Less, you know, or so it's great news that we've gotten to the early adopter segment. Right. Cause it's thicker. Is it still on delay because of the variant,

00:40:32 do you think No one predictor, right. It varies company to company and like, I'll give you, I'll give you an example. I facilitated a panel with large enterprises. There were six companies on it. Yeah. There, there were six companies on it that represented 250,000 employees. Wow. So very big companies. And I asked them the, the way,

00:41:00 the way more kind of later stage decision-maker would, would look at an office choice is to say, is there a productivity loss, right? Is there a productivity gain? Will I gain employees? Will I lose employees with these types of decisions? As opposed to a zealot, might look at this and say, well, I've got to do it because it's a symbol of something I'm either going to work remotely because it's a symbol or I'm going to go to an office because it's a symbol.

00:41:26 And so what, what that group said that was most interesting is I asked them are any demonstrated losses of productivity that any of you could name because of working remote. And that's a very like practical question that a big enterprise is gonna, is gonna think about. And there was one out of five out of five, there was only one. And here's what it was.

00:41:51 They, they mentioned that their call center employees, when they work remotely will have a higher incidence of it problems either at home internet being slow. Sure. Their, their laptops being kind of malfunctioning, but here's the key. This, this was a, this is a financial services company that was talking. I said, okay, well, that makes sense.

00:42:13 So, so you're bringing people back to the office then, and they said, no, we're not, we're building a mobile it unit. So We're just going to solve that problem. They'll Solve it. And so, so I think, I think, you know, there are certainly examples of companies like Goldman Sachs, who has a whole culture around,

00:42:35 they call it apprenticeship. That's a very positive spin on what it is. Paying people a lot of money to work a lot of hours. That's really hard to do in a remote work environment. And it certainly doesn't tie into their value of apprenticeship to, to have it work that way. There are other companies like Motley fool that we're going to do a webinar with who has a,

00:42:57 a, a real distributed strategy that they're developing. And they have about growing about 40% a year and have about 700, 800 employees is a big company there. They have a value called B Motley, which is bring your individuality to work. That type of culture works better in a distributed workplace than a Goldman Sachs one. So in both of those cases,

00:43:25 those are not th those are, those are culture driven, but divergent choices. And they're both quite practical for, for their cultures in their company. So that that's the type of world that I would encourage any coworking or flexible office provider to think is like, what's my practical value prop right now, because that's where this market is. And it's where it will be for the next 10 years.

00:43:53 So that the folks that can really make that argument, not just a big company is, but to small companies, I think are going to be the winners. Super interesting. So thank you for sharing your insights. And I, so I'm a big platform, a proponent, anybody who's listening, who's not on upsweep then I think the value of upsweep is you're,

00:44:14 you're doing the heavy lifting of having these conversations, right. And getting end users on the platform. So the operators need to, right know their sort of their practical equation build the right space, build the right product, manage the leads that you send through. But, you know, you're doing, you know, a tremendous amount of education for the industry and sort of funneling people into understanding flex and creating that demand.

00:44:42 So we appreciate you for one and to any of my operators that are listening that are not, you know, if you're in north Austin and get on the platform, but I suspect there, there are lots of pockets like that, that we'll start to see, you know, pop up. So, And the additional Jamie, the additional value prop is I can say is if you're on upsweep,

00:45:06 you'll also be on square-foot dot com, which is about, at this point is about four to five X, the traffic as well. So it's, we've essentially five X, the, the lead flow that we're going to be able to get for our operator partners in that, that makes me really happy to be able to say that to your group, because I think all of the operators are still in a,

00:45:28 in a mode where they could always use more members and so a hundred percent. So a huge, Huge reason to do this was to say, well, how could we, how could we even make it better for them? And that, that was really the primary motivation of joining square foot. Awesome. Okay. We have to wrap for today onto the next interview,

00:45:47 but thank you for, for the work that you do and for sharing your data and your insights. It's, it's helpful to everybody listening. I love it. And I think my listeners really appreciate it. So I look forward to doing it again. My pleasure.

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