387. Scale, Sanity, and Strategy: Craig Baute's Real Talk on Merging his Coworking Business with Another Brand
Resources Mentioned in this Episode:
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Masterclass: 3 Behind-the-Scenes Secrets to Opening a Coworking Space
TRANSCRIPTION
387. Scale, Sanity, and Strategy: Craig Baute's Real Talk on Merging his Coworking Business with Another Brand
00:00:00,"Welcome to the Everything Coworking podcast where every week I keep you updated on the latest trends and how to's in coworking. I owned and operated coworking spaces for eight years and then served as the Executive Director of the Global Workspace association for five years and today I work with hundreds of operators and community managers every month, allowing me to bring you thought provoking operator case studies and inspirational interviews with with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the coworking industry."
00:00:43,"Hey, what are you doing this summer? How about using your business address to make some money? We are bringing back the Mailbox Money Maker Challenge and we cannot wait. Our last cohort, which we ran last fall, had so much success and summer is the perfect time to use the quieter time in the office to get a project done. And what better project than one that makes you money?"
00:01:15,"Whether you already have a Mailbox plan and want to optimize it or you have not done it yet because you're feeling a little overwhelmed and you never quite get to it or we are here to help. This is a step by step challenged to get you making new or more money with your mail program by August. The program is nine weeks. It's starting on June 16th. Registration is going to open soon."
00:01:44,"So if you're interested in learning more and getting all of the details, jump into our wait list@mailbox challenge.com and you'll hear more over the next couple of weeks about how it works and how to sign up. Okay, Today's guest is Craig Baute and Craig is sharing the BTS on his experience selling his coworking space so he dives into why and the context and what his history has been."
00:02:14,"Craig's been doing this for a long time, which you'll hear about in in our conversation and kind of what led him to decide this was a good idea, how he feels giving up the control as the 1 decision maker in the business, what the structure looks like in the new larger operation that he's now a part of, what that's structured like and what he thinks the future looks like."
00:02:40,"So for anybody who's thinking about selling or merging with another business as a way to grow and expand, this one is for you. And thanks Craig for being willing to share all the details. We really appreciate you and Craig is an example of the sort of beautiful culture we have in this industry. Okay, without further ado, let's talk to Craig. Welcome. I am here with Craig Baute. He is a co founder and partner at DenSwap and Creative Density."
00:03:17,"He has some updates that he is going to share today. And I also have to mention that Craig and I share a special bond which is that we have the same birthday. That's right. I feel like we had a GCUC on our birthday one year. We did. In fact one of the very first juicies. Totally. I mean it's a fun way to spend a birthday. That's right. Okay Craig, I can't wait to catch up."
00:03:37,"We've been pre chatting but we haven't because we. We haven't talked in a while. So you have a lot going on and today we're going to talk about what's new in your business and the You've got a big announcement and you're going to talk about the why and the how and all the good things. So you have merged with a local operator. Give us some background. How many locations how many years you've been in business."
00:04:02,"I'm just going to let you roll because you have a lot to share. I'll interrupt occasionally with some questions but I know you. You've got a plan around what we want to share with the audience and this will be fun. Yes. And. And please jump in. I have. Thank you. Yeah I've. I'm known to talk so. Me too. That's why I'm like okay, I'll just let you go and then I won't get in trouble with any listeners for talking too much."
00:04:25,"Okay. So one I feel like this is gonna be really relevant to all the listeners out here because backstory I've been around since 2011 in the coworking world. Opened my first space when I was just oh God. 24 with MasterCard as my. As my investors back in the day when you didn't have you didn't compete on amenities. You just created a vibe and like hung out with each other."
00:04:49,"I remember that you guys have a kickball team and kickball tournament. Yeah. Fun fact. That's is one of the reasons why this merger happened is because it's those things that you do of it was so it was a kickball tournament between coworking spaces. Okay. And we started that through Denver coworks. Okay. Anyways we'll we'll wind it back for the story started first coworking space in 2011. Very coworking 1.0."
00:05:16,"I needed a place to work. I loved being around people never worked from home. All that story. That's how I got into the coworking world. Have had several locations grown closed Some down, sold, some bought some. This time around now lifestyle change. Two kids now in the picture. Life got busier. I now have new expertise and new desires than running the coworking space after 13 years have always had little, have always had little side projects."
00:05:50,"Now those little seeds have grown into needing much more of attention. Listeners. I bet you relate to a lot of this. And I had a great right hand person. She was awesome. She started running one of my locations and as I became busier, she really filled into that role. Started running. We had four locations at the time and she basically was running the space with me as her assistant."
00:06:19,"Okay, this all leads into the thing. She was with me for four years but eventually they leave and I was pulled into the day to day operations all over again. Now I am running like four locations. And you don't remember how anything works at this point? Yeah, I remember having to work at the front desk. I'm like oh my God, wait, how do we do this? And having to like watch the videos and."
00:06:47,"Yeah, what do we do? One thing that's way better is like at least the software like stores all the leases now and like keep tracks of everything. Yes. Lots of technology improvements. But you're like, oh my God, I am like replacing keys, I'm repairing keys, I'm filling up ink. I'm like, not like I can't. I just like when you have four locations and you have two kids and you have a schedule now and as like I'm doing all this market research and feasibility studies, like I have deadlines coming in from there Anyways."
00:07:22,"Right hand person. Yeah, wonderful person. Wait, like a GM level or was she a location manager plus GM level? How did she fit in? So yeah, she was part time community manager, wrote, went full time after that, then she was managing and she probably had two part time people running around on all the locations. I always had my point person for. She was the point person. I didn't have to deal with daily emails."
00:07:49,"I always hung out at my favorite location, my original location. And so I did work. So I was present but like not the point person. Anyway, she leaves, I'm now the point person and then I have to hire a new point person and then I have to train a new point person. And then what I found out is I am the person running it and they're my assistant."
00:08:12,"Yeah. And that's not the way it needs to be. So I called up because the local. So at this point we had three locations. Local. Is this local? Three local locations? Yeah. Chicago is separate. Okay, three Local locations. I'm pulled into the day to days. And because of Denver Coworks, which is the alliance that launched in 2012, US space owners all getting together about every other month. I eventually called."
00:08:39,"We've. We've always kind of like flirted with each other. They've been around since 2011 as well. And I knew we got along. Called them up quite literally. It was like I got an email and I was like, God, I don't want to do this. I called, I just stepped outside and I called Chad, who's one of the owners of Thrive, who we merged with and said, dude, let's have lunch."
00:09:01,"He goes, why? I'm ready. It's time. It's time. Which is so funny. They said, they said. They took me out to lunch like a year ago and said, I thought we went. I thought you said no to us. I'm like, I never knew. You asked me out on a date. Like, we gotta be explicit about this. Like, let's not just beat around the bush, me. So we knew each other."
00:09:24,"We both run our businesses in a very similar way. Here's the big difference. They're run by brothers. So there's two owners. They are. Over the course of 10 years, they were more ambitious because it was always me. So they grew to five locations. And all of my locations are neighborhood locations. So generally think 3 to 8,000 square feet. Their locations are more hubs, regional locations ranging from basically 15 up to 40,000 square feet."
00:09:54,"So they've grown. They went to more locations, they went to larger locations. And here is the, the, the key that was like, oh my God. Like this is the group. They have middle level managers. They got to that scale to where there was the community managers. They even had some associate managers that there. And then they have two people that are head of people and a person in charge of operations."
00:10:21,"And then the owners sit on top of them. And they were in that point to where they got to middle level manager level. And that middle level manager level has capacity. So like they, they know that they need to grow in order to justify that. Yeah, yeah, to justify that middle level manager. And that was their strategy. So the owners can do other things like growth. They're focused on growth."
00:10:47,"They're a contractor and an architect. Are the two brothers. They're full time coworking people. Yeah, it's a very powerful super skill to have a contractor and an architect. And then I can join in that management level on top of them. More like at a board level part time. But then it was that Middle level manager. That is key. That does take scale. Yep, it does take scale. I mean five locations is probably just about it."
00:11:16,"I think that's one of the hard things about this business is you had three locations and maybe there's you know, smaller whatever. But still you get to the point where it's like well somebody, you know it's hard to. Somebody has to pay attention to all three of them. Yeah. Somebody's doing marketing. There's still all the functions that need to get done. But right. You're not quite at the scale where you can hire right."
00:11:36,"CMOs or the, the resources that really start to make it more comfortable. But then also you have to maintain that scale because you're allocating their salaries across the locations. It's. I. Yeah. I think it's a, it's challenging because it's like hard to get to that scale and you really, you know, you need more help outside of the location level. But it's hard to make it work financially. So that's why a lot of coworking spaces they get one to two."
00:12:05,"Yeah. At like maybe three but then you see a jump up and like to where then the people have. The groups have eight to 20 locations and become local operators. You have to. And you have to make that commitment or that jump. Yep. We made that commitment and jump by coming together. So it's, it's, it's exciting. I'm glad. I also have a little bit of safety barrier that I won't ever get pulled back into the day to day."
00:12:34,"But there's also a lot of changes in my, in your own men. In my own mental state that any small business owner does that when they, they go out of this of. They're not the, they're not the dictator. They're not the person in control charge anymore. Craig. No. I'm part of a team which is exciting and like totally. Yep. It's. I have meetings now. Yeah. And this is me like at a like a part time level doing."
00:13:04,"Yeah. Then I'm. You're. I'm sound really dramatic. Mine. I have an hour and a half meeting once a week that I have to attend. Yeah. Yeah. Is it your like executive team meeting or the leadership team meeting? Yeah, yeah, yeah, yeah. You feel a little dragged down by that like slot on your calendar. Yeah. Yes. Client calls. You have other things that take up time out of your calendar."
00:13:28,"I hear you. Yeah, yeah, yeah, yeah. It's a big change when you're an owner and you're like I have no meetings. I just make decisions Right, totally. And you never feel, I mean, I'm sure the executive team meeting is very productive, but. Right. All the corporate people who are just like, yeah, I just sit in meetings or like they're multitasking on calls or whatever. I'm like, I have zero calls where I'm not in charge of the call."
00:13:48,"Yeah. There's no. Just sitting around wasting time. Like, yeah, yeah, yeah, yeah. Those are the prices for making that jump of when you reach scale. Like, I always, I have friends that are software developers. They're software developers. Well, after five years of being a software developer, your next level up is managing software developers. And they're like, oh man, I hate doing that. They're like, I just want to write code."
00:14:09,"I want to. You have to make that switch. Yep, yep. And so we made that switch and there's a lot of exciting possibility like they're excited about because of this scale. There is growth and there is like, like we can start being aggressive in, in growing and like open up two, three locations now. And there's now divisions of headspace to where someone is in charge of growth, someone is in charge of like build out, someone's in charge of marketing."
00:14:40,"And when someone quits, there's someone in charge of like finding a new person to replace them. Yes, yes. All of these exciting things that require being part of a team with the sacrifice of decision making power. Yep. Okay, so what, what will you be in charge of? You mentioned sort of a board level. So structurally, what is. I'm sure this could look like a lot of in. You probably sat down and had lunch and thought, you know, when you said, okay, let's have lunch and had to figure out, like, what do you want your role to be?"
00:15:10,"I assume there's some sort of like financial component of that plus a, you know, what does Craig contribute to the organization which doesn't necessarily have to look the same. Like if people are listening and thinking, oh, that sounds interesting, like you probably can carve that out based on your interests and your skill set. But yeah, how did you think about that? And then without, you know, giving away any, you know, sort of personal secrets, when you say merger, like."
00:15:34,"Yeah. What does, how did you sort of think about that structure? You still have a financial state stake in the business, I presume. Yeah. Tell us, tell us what you're willing to share. Yeah, that's fine. I like being an open book. Hopefully. Hopefully the team is all good with that. So they were already structured in a very like, good financial, like corporate level because they previously had Investors, they no longer really had outside."
00:15:59,"And also everyone should have an operating agreement if they have. Yes. So they had that all like everything in place. There is the mother, there's. There's two. There's the holdings company. Okay. And then there's the management company. Okay. So this will be very familiar to. To some people lease their locations or do they? They. They. So I. Mine were all management agreements. Oh. So I. I had management agreements."
00:16:26,"They had leases. So there's the holding company and the holding company has all of the locations underneath them. Okay. So that's like. And then there's the management company that is really the owners. Yeah. And we get paid 10% of revenue that goes into the management. So it's very similar to a franchise. Yep. And then the holding company is its own LLC with all the individual LLCs on top of it."
00:16:55,"So if you needed to ramp up a space with a loan or an investor, you could do that at the site level. But then revenue share goes to management, then is responsible for branding, marketing, finding new locations. Just the leadership. Leadership. And then we get distributions based on that. Yeah. I'm interrupting for a second. Are you working on starting a coworking space? I often emphasize how important the planning stage is."
00:17:31,"You've heard me say most unrecoverable issues happen well before you open your doors. And they are related to the size of your space, your real estate deal, and a few other things. If you think you are going to pick your favorite coworking space and reverse engineer what you think you see happening in there and then pick your own paint colors and your favorite furniture, you are in for a surprise."
00:17:59,"This business is really about making the right fundamental decisions that align with your individual personal and financial goals. So we want to help you avoid the mistakes that a lot of operators make in planning and launching that can really set you back in terms of time and finances. So we have got your back. We have created a free training to help you really get behind the three key decisions that we think are the most critical for you to get right when you're designing your coworking business."
00:18:37,"The model, not the colors, the model. And these insights come from years of operating, designing the model for two different locations, and then my work with hundreds of operators as they work on their businesses. So grab your spot in our training class. You can watch it anytime. It's totally on demand. And start your coworking journey with confidence and the right strategies in place. You can grab that training at everything coworking.com"
00:19:08,"forward/masterclass. So. But there ideally is a consistent 10 fee that's going to the management company. Correct. From each location. Like overall. Yeah, yeah. And I should feel comfortable saying that that's pretty industry standard. Yeah, totally. Is a 10% thing. My role then is operation is growth. So really finding new landlords to work with because it's really. We're keeping Creative Density and we're keeping Thrive as two separate brands."
00:19:37,"One is going to be like neighborhood coworking. The other one is going to be the hub and spoke model. Is, is the hub model and then management agreements. That will be my main. Because I have a lot of. Because of DenSwaps relationships. It's really, this is one option that they can be. And we just get land. We, we help landlords at DenSwap develop their strategy."
00:19:58,"So if it happens to fit in with Thrive and Creative Density, great. If not we can do another route. But that's just kind of like my, my expertise and main contribution. I also just love marketing. So I, I, but we have a marketing person so it's also not just me purely. But I get my hands dirty. I was working on SEO. I was just reviewing stuff yesterday and I'm like, I don't, I don't need to do this anymore."
00:20:28,"But I also am part owner. Like I do own. Yeah but so you, maybe you're having to put yourself a little bit more. I mean you had that sort of CEO role but smaller locations, no marketing person. So maybe you were doing some of the things. I was doing it. I was doing it. I also enjoyed it. Like, you know that smile when you're like I'm doing something right now."
00:20:46,"Right. I'm crafting my email in order to deliver on your growth objectives because now you're sitting in a room with other people who expect things from you, which is probably also a shift. Right? Like yeah, I think, I think is mostly as entrepreneurs we expect a lot from ourselves. But it is different when you're like, you know, you'd mentioned your 90 minute meeting. Like you have to show up and you, you know, report on what you did."
00:21:08,"Yeah, probably. Yeah, yeah, yeah. I kind of like, I mean I got the. What'd you do? What, what'd you do this week? And I'm like, I did stuff. I, I swear I don't know if I use like EOS or Do they have a eos? Yeah, Yep. EOS is the, is the method. We have a. We just scheduled our quarterly to go over our rocks. So that's new. Which is a whole new, that's all new for me."
00:21:31,"Yeah, I've read it before, like seven years ago. Yeah, it's hard to do with a small team and so. Yeah, that'd be fun. Yeah. No, it, it, it is to have, like, goals because so professional development. Yeah. This is other coworking space. Owners will pro. Like, there's a risk tolerance that you learn that you have after a few years. And especially, like, as life changes, like with having kids and everything, your risk tolerance just changes."
00:22:00,"Either you kick it into high playing for paying for sports. Let's see how your risk tolerance goes. Because then, Jamie, I'm excited for college because that will be cheaper than daycare. Seriously. Two in daycare is brutal. Daycare. Yeah. Well, they got one who's almost kindergarten. Almost a year. A year. A year and like another half away. Another year and a half. Brutal. Yeah. Yeah. Hang in there, man."
00:22:30,"Can't wait for college. Can't wait for that college. It'll be so cheap compared to now. Yeah. So risk tolerance levels, like. So when I did my growth of like going from 1 to 4 and then purchasing some Chicago locations, like, I, you know, it was just me that was relying. I, like, I had my wife, but she worked full time. Like, we, you know, you can figure it out."
00:22:49,"But then your risk tolerance is Changes, changes. And that was the big benefit of like merging is there's a lot of strategic value, but the, There's. I don't know, you. You reach a different scale and it spreads. It spreads the risk out and it's exciting. It's exciting with change. Yeah. Yeah. Well, I think too, there's an opportunity cost to your time that you. Is so clear to you now."
00:23:17,"Right. Because you weren't in the business. That's a good point. But as the assistant and then you're starting, you know, then when you had to pop back in, you and you're like, okay, well, now I'm spending my time, like, you know, fixing the printer jams and onboarding people. Like, yeah, not a good use of your time, which I. But, you know, to your point, sometimes I think operators start thinking, well, that's fine."
00:23:40,"I'll be an owner operator, and I'll pay myself the community manager salary and I'll work in the business, you know, which you did for a while until you hired your, you know, managers. And then at some point, things in life change and you're like, okay, yeah, that's not going to work. I can't do the $25 an hour job. I need to do the, the high. I need a better hourly rate and so then you have to make, you're like, I'm literally getting hired over here for much more."
00:24:04,"Like. And you're like, this is, this is. So yeah. You have to start to take a step back and think long term because coming from the DenSwap perspective I see I, I've seen people in the same position that come to us and being like, I need to sell. And it's like, why do you need to sell? It's like, well, I'm, I'm moving. I can't do that. I don't have time for this anymore."
00:24:24,"And it's either try to like sell cash out or it's going to close down. Right. And it was like, I think this merging, it's still very rare in the coworking world. This is now becoming as a new option. Yeah. As you start to get more players that have, you know, two, three locations, even two locations can come together. But if you can get a little bit more to that three to five."
00:24:51,"Yeah. And if you can get to that level with the middle level managers. So and to your point like five plus three is bigger than eight, Right. Because you've got like the value that the folks on the team are bringing allows you to scale further and they adopt it. So, so did. I mean they, your spaces are smaller but they like that as an option. Yes. Yeah, yeah."
00:25:15,"So those are much more automated. Okay, got it. Tell me about this. Came up at GCUC and I. What. Who is the segment that wants an automated space? You know, in our industry it's all about hospitality and you know, the human connection. But you have automated locations. Who, who is that for? So when they're management agreements, a lot of them were in second gen spaces. So there is office people, but we still have like 20 to 30 remote workers at each location."
00:25:43,"Okay. There is. When it's smaller, you can design the space to create interaction that happens organically. And I think that's an, that's an under utilized thing of just designing space in an intentional way. That does take an expertise and, and, and, and just experimentation as well. People that just want to get out of the house and, and that's generic. I don't, I shouldn't say that. We found our competitive advantage is the design that creates interaction."
00:26:16,"I'm there to kind of like start poking the bear. I call it the. I, I often bake something simple and I shake it around in people's faces and I call it the bacon shake to start. Craig, tell me about yourself over a cookie. Yeah, exactly. Right. But yeah, okay, but see this is where I love being a community manager. And now I'm like leadership level and I'm like, okay, this is a different, this is a different conversation automating space."
00:26:41,"Okay. Phone booths, great coffee, great people. Phone booths and monitors. Hit those four. If you hit those four things. But how do you manage coffee? I mean when you say great coffee, are we talking about pods? No, no, please. Okay. That was the one thing. Your. Good question. Good question. Good question. The bean to cup ones are awesome. Okay. Yes. You know you're going to spend a thousand dollars to $2,000 on a machine."
00:27:09,"Do that. Yeah. Be in the cup. Great option. Unless you have a copy shop downstairs and everybody's walking downstairs anyway. But right the. Right. So go that route. And then standing desks and monitors and phone booths. So great people. And you can attract great people often by having a spark of energy with. But let's take that out of the equation. Yeah. The physical things that people really want."
00:27:31,"Standing desks, monitors, phone booths and great coffee. If your branding can be in a light that attracts people that are happy that like have this little chit chatty and your branding can do that. It can be the self selector. Right. Then you're going to attract people that are already like chit chatty. And then you've designed the space with intentionality and now you're just providing them these one off amenities that can endure phone booth monitors, standing desks and intentionally designing those."
00:28:02,"In a way we found, we've, we've found success in that. I mean the neighborhood. Then there's this new model that I've been obsessing about. I mean I have presentations about the neighborhood coworking space. Like switch yards, right? Yes. You and everybody else. By the way, do you know how many okay yards knockoffs there's going to be in the next couple years? Dude. And, and I've. My presentation is probably like there's a lot more underneath that than what they are."
00:28:30,"Yeah. They've opened up 25 locations, 28 locations and they've nailed it. They just launched their location in Denver. I think they have some secret sauce. They have some secret sauce. Their rollout strategy, their landlord friendly approach. It. I mean based on my analysis it cost them around 116 to $130,000 to launch that space. I don't buy that much on furniture. It's all furniture. They have zero built. They have basically zero build out at their locations."
00:28:57,"And they use file cabinets and 68 fake plants. I like went down and like count. They're all fake. That's One of their biggest line items in my mind is fake plants and plots. They have 68 fake plants at their Denver location. They have around 70 file cabinets. I mean I got it all broken down. Their coffee machines cost $6,500 a piece. They put two of them at each location which does around 210 cups."
00:29:25,"So someone can come by every two to three days to fill that up. Anyways I. You can break it down and. And well you better log off and get going because there I have a list of people who are on the. On the same path. But it's not as there is a. There's a much bigger secret sauce. Yeah. I don't think it's that easy to replicate. I think it looks easy."
00:29:46,"It's. It looks easy just like coworking in general looks easy. But it's not. I agree And I like we. We looked at the that target market that that area and we're like oh crap. Like it was 7 out of 10 for shared desks with a high income of like 220,000 like when we break it down but it was 0 for offices. When we like did a. Did a hand drawn polygon of that area and we're like oh crap, that's a market."
00:30:16,"Like we've never. They're going after the Mostly from Homers. The mostly work from Homers is what at least I'm calling it. I haven't figured out a catchier name but there I sat there and I like listen to people on pre open and it was everyone they were going to work from home. It was the people that went to the coffee shops two days a week for two or three hours."
00:30:34,"Yeah. And $99. You can do social pressure on your friend at $99. Yeah. To join you always. Yep. Join with me. And then that's exactly. Yeah. Yep. There's something special about $99. The simplicity of the model. They don't have a special high income then they just don't even. It's like so it has to be in the right dense neighborhood. It has to be walk. Walkable Dense neighborhood. High income."
00:30:58,"Yeah. Mostly work from homers. I think that's might be what creative density in this merger starts to go down that model and you can do it with offices as well. There's a lot of forward thinking that will be the growth of creative density will be in of that y in this automated model. Yeah. Hey there. I'm jumping in again. This time I'm speaking to those of you that are either getting ready to hire a Community manager or who have a community manager and you would like to support their training and development."
00:31:35,"We know how challenging it can be for coworking space operators to create their own training and development material to support their community managers. And this is so important in terms of onboarding new community managers and supporting the growth of your existing community managers. So the platform is really around a couple of things. One is access to a community of like minded folks. We have a very active slack group with really wonderful questions that are posed every single day and we find that's one of the biggest values we have community managers from all over the world."
00:32:15,"And this is an excellent group of community managers that have invested time and effort into getting better at that role. And they are the kind of folks that you want your community manager to be by and hanging out with and they know their stuff or sometimes they don't and they ask questions and we help them out. So I'm in the group. We have coaches that are in the group to support them."
00:32:37,"So we love when they ask questions for things they need help with because the other aspect of the program is really around helping them get resources they need to make their jobs easier and to learn things that they can use in their role to be better at their job. So we provide some done for you resources like Google business posts, detailed event ideas, et cetera that they can just kind of grab and go and use."
00:33:05,"And we also provide monthly resources that add to our training library so they can do our certification and then we have a lot of electives that help them kind of get better at all the things that that go with the role. So the our community managers wear a lot of hats. So we break our content into industry knowledge for new community managers, Community building operations, sales and marketing and leadership."
00:33:34,"So the leadership bucket is great for our more advanced community managers. We also have virtual office and digital mail training and coffee training for anybody who needs to know how to use commercial coffee brewers. So we have some of the. I'm just going to give you kind of a sampling of content that we have. So in our community building modules we have Hosting your first member events, Building community with budget friendly events, Member event swipe files."
00:34:05,"Our sales and marketing modules we have tour training. We have the training on the full coworking sales funnel so they understand what that looks like. We have social media planning frameworks. We have. What else do we have? Three simple steps to an effective marketing newsletter. These are just some of our samples. Ooh. These are some of our best utilized topics. Demystifying the process of Letting your coworking members use your address for their Google business listing."
00:34:35,"How to close a tour operations modules, how to set up automations how to do a new member onboarding audit. Simple ways to use AI to boost your productivity. We have over 40 courses in the program so we cover kind of higher level topics and then we also cover things that are timely like the CMRA updates, Google business updates, et cetera. So we get together monthly to do official training and we also host a best practice sharing call which is one of the fan favorites of the group and the Slack group."
00:35:12,"So if you have any questions at all about the program, don't hesitate to reach out. You can learn more and register at everythingcoworking.com forward/community manager now back to our episode. But anyway yeah you have some teams so you mentioned in your notes it sounded like it was attractive to you that your team members would have some upward mobility or ability to take on other roles. I very. Okay, I'm glad you brought it back down to that."
00:35:42,"That as well. That's something that coworking coworking space. I mean this is one of the reasons why I lost my right hand person is she was the top and the bottom. Right. Like she. Yeah. She was managing some part time people but after four years she maxed it out. So by merging and creating these larger entities you can develop your talent and that is something when you're an owner operator that you never think of you're creating a job for yourself."
00:36:06,"Well, once you start hiring someone. Yep. It's a different dynamic. Well and you know I run the community manager university. I mean we sort of see like clockwork two years. Two years. Yeah. You get two years out of somebody and then they want to do the next thing and they have a lot of transferable skills and they've had a lot of ownership and and then it's time to go do something else."
00:36:29,"It's hard. Don't have the next thing for them or a new location to move to or a space to launch or those types of opportunities that create that excitement and ongoing growth. It's hard. So I loved that point and it's. It's very exciting to have these work along some of these like coworking lifers that have been inside the company for, for five years which to have multiple people."
00:36:56,"Five years. Yeah is, is. Is very unique. It mostly happens with larger brands. I mean we interview people, you know, lucid eos and they talk about these. Right. Long term it's because there's always something like to do there's Always something new and exciting happening versus same two locations. You know, that's exactly right. In fact, like community manager. So Thrive, the Thrive crave density is going to have 12 locations the next three years."
00:37:22,"And that's what the EOS plan says. That's what the EOS plan says. God, I hope I'm right about that. It's right there. It's right, it's, it's, it's right in that pocket. But people move across the, what's called the Front Range of Colorado up into, you know, Fort Collins to Colorado Springs and down and they move. And now we have a location and we can just transfer that person over."
00:37:46,"Like, just in the, the, like nine months that I've been sitting in on leadership meetings, we've already had two or three community managers switch locations for basically that exact same reason. So there is an amazing benefit in scale that you scale that you, that you don't realize that is just keeping talent and keeping members. So we've had a former member of Thrive just joined a creative density, not knowing that there was a merger or anything."
00:38:11,"It was, we were there in his neighborhood. Yeah. And his gym, his gym is by the old Thrive location. And so now he's using both of them. Oh, nice. Yeah. You know, there's, you're starting to learn these competitive advantages not only in members but also staff. And really the staffing is, is an unspoken secret. We all talk about keeping members in the ecosystem. Yeah, but keeping your staff members so much work, I mean what you described like, okay, well I lost somebody, I can train them."
00:38:45,"It's gonna, it's a lot of work to train somebody, especially someone who's more of a, a gm. There's so much, so much there. Any other kind of like economies of scale, like can you talk, you know, things that you're excited, you know, landlords are much more willing to talk to someone, to a group with multiple locations. That landlords are very much risk adverse. They like seeing that you have expertise."
00:39:10,"They like seeing that you have a proven track record. Especially if you're looking at management agreements which still aren't as popular as the Internet. Makes it huge. Yeah. Everyone likes to talk about like I once had a conversation about a management agreement, but they do happen. Like I had three. All my locations were three. Actually I've been one of my Chicago locations. Our management agreement. Okay. So, you know, speaking out of both sides of my mouth on this one."
00:39:37,"Landlords like talking to people that have a track record. They're going to come, they're willing to come to you. You can also have this capacity to spend effort to talk to landlords versus just learn about the date. Like keep doing the day to day growing that. Right. Like that is a managing the pipeline is like a part time job and when you're really. Yeah. If you don't have the right carve out the capacity to do that."
00:40:04,"Yeah yeah. And that your balance sheet is stronger. You're just more diversified. You you can know these strategies on oh this landlord's willing to put $15 of TI into the build out which is incredibly low. Just in case if anyone doesn't know that. But we've done that. We're like oh well this is the business model that can fit and support that. This is our strategy. Now we have two brands we can execute on this $15 ti and now this is going to be the way that the management deal needs to be structured."
00:40:36,"We have now all these give and take. So there's just optionality and expertise on how to deal with landlords. Yep. Totally love it. And marketing, you mentioned SEO. Like they're do they have in house marketing or do they outsource in house? In house marketing in fact in Colorado. Yeah. The like the several of the Venture Xs and the office Evolutions and intelligent office of the vast network. Yep."
00:41:03,"They created their own group. Like several owners in metro Denver came together to do their own group. They now have like 20 locations. They're all tightly working together. Yeah. So when you go to one location they have a flyer that says within two miles. This is the other brands that we have and this is their price point. And this is like outside of like mothership franchise. This is all of those local groups working together."
00:41:36,"Yep. And they they took a location that was sitting at around 40% occupied and they got it up to 80% over the course of two months by doing this, doing this lead sharing. Oh we now you know one mile away is you came to the flagship expensive location because you kind of want a fancy expensive location. They're like but a mile away we have this one that's doing some good deals right now."
00:42:02,"So if it's not a fit for for the lead, you're not a fit for this location. But we're part of this network and so we're gonna suggest why don't you try this one. This might be a good fit. And so. Got it. Got it. Yeah. Yeah. Which is something that Denver Coworks especially did early on. Yeah. Is like we had a contact form and a lot of people came through Denver Coworks and we would then tell them, like, this is the one that's fit your vibe."
00:42:26,"Like, it was kind of like, can you be a, a, a voice of vibe? Check. I'm looking for this in this neighborhood. Do you know what, where I should go? But they were able to industrialize it at scale in metro Denver and it helped out all of their locations because otherwise they were going to go to competitor spaces that were nearby, but now they're just like, you know what, here's the simple location sheet."
00:42:51,"Yeah. And it presents as a unit. It's helpful to the consumer. Yeah. So there's value in that scale. Totally. And there's, I mean, the one thing I could talk about quickly is just when you do this, you're not the owner. And this. And it is something I quickly learned is before every dollar in was coming, every dollar was coming into my pocket. Right. You were really motivated. Yeah."
00:43:16,"And you already kind of earmarked that dollar and be like, oh, I'm going to get this thing. When that dollar comes in, I'm going to like upgrade something. And yeah, I'm going to go, or I'm going to go on vacation. I like, whatever. You get to decide where that dollar goes. Every dollar is a profit. When now you're part of a group and you're an employee, you're, you're more salary and distribution."
00:43:39,"So the way that it's structured, if every like $10,000 that comes into a location, I would get 180, I think. Yeah. Like 180 of those dollars. Jesus Christ. Is that a mind shift? Of what? Right. You know, this is one of those. You're part of a team. Yeah. So my big takeaway was, oh, that's how our staff experiences life. They don't ever experience it as $1 in is like."
00:44:14,"Yeah, yeah. And so I've really been trying to think of a different new way to play around with compensation. And like, I'm sitting on this right now. And so if my community manager ever, like, if, if she does listen to this one way that, like, once we get above, you know, the hurdle that that number that you need, it splits into three ways. Like every dollar of profit just splits into three ways."
00:44:39,"$1 to the company for improvements and everything. $1 to the company, $1 to me, the owner, and $1 to my community manager and really kind of like make them feel like an owner and everyone just gets equal share after, after this, this hurdle number. So it's like profits just get split. I mean, we've played Pretty hard against that on a separate podcast. Yeah. But yeah, okay. I'm fair with that."
00:45:09,"That's fine. I think, I mean you gotta make it sustainable. I understand what you're saying, but I think every employee like has that experience. Your community manager. I mean the big brands with sales teams incentivize their sales teams really hard on sales and retention. Okay. You have to have like big locations with a lot of movement in order and you gotta be opening new locations to have that opportunity to fill a space."
00:45:37,"I think you just have to be careful where you're incentivizing behavior. That should be part of the role. Fair. I'm just saying. Oh, that's fair. Margins are not, you know, 70% so. No, you're right. Sustainable model that also supports growth because maybe you have investors, but I'm guessing. Oh yeah. This would be. Have to be the neighborhood hobby, like hobby business. And that is one where I'm thinking a lot about retention and creativity and being like creating that same stir."
00:46:12,"This hasn't been tested. I know when I gave my community manager a very good incentive to fill up offices. Oh my God. It was just. It depends on the personality and depends on the opportunity. And the problem is once you fill up offices, they're full. So then there have to be systems in place to. I, I just think it's. You have to very carefully match incentives to like the behavior you're trying to create."
00:46:38,"And once a location is full, you don't want to be incentivized. You know, it's just. You don't be. That's not. It is something that. Yeah. Don't take my words as God's word on this. Yeah. But also you're going to learn a lot because you, you're going to be launching probably more locations than you would have on your own and you're gonna see what works and what systems they use."
00:46:59,"Big takeaway is. Boy, you're. I've never been. Not been a full blown owner. Yeah. And your employees are seeing the business through a very different lens. Yes. And when you experience it either. Correct. Yes. Yeah. That needs to be priced into that hurdle like a baby. Yeah, that's true. Yeah. So I'm just saying you don't get compensated the same when you're not taking the risk. So when you're, when, when you are thinking about it, there is a, there is a big difference between owner and then employee I guess would be the, the best way and try to shift your mind to really understand their perspective."
00:47:40,"Sometimes that. Because that was something That I was definitely not expecting because all of my other businesses, I'm, I'm one of two or three owners at them. So. Yeah. Big shift. Yeah. Yeah. Okay, so this is kicking. It is formally being announced but you've been kind of in this role and you're sitting in on the meetings and well, you mentioned in our pre chat you said the members haven't even blinked."
00:48:11,"So you've started to socialize this with your members. Like were you worried that they would be worried? Like were there things that you were worried about that didn't come to fruition? No, there's nothing that I was worried about. One thing because I have bought and sold coordinate spaces as well. Yep. One of the lessons is like members don't care nearly as much as you think. Yeah. Like it is a very personal thing."
00:48:35,"The ownership and the business strategy. They care about the experience and they want that to be consistent. But the behind the scenes stuff, they're not going to take that on. Yeah. God. And you think that they're going to care. Like they don't. Yeah. And so they get some benef, they get some benefits. They do care if their prices go up. Yeah. Like unjustified. They do care if there's like larger bureaucracies being in place."
00:48:59,"But overall they do not. They don't care. And that, that's an important takeaway. This is very personal for you, not very personal for them. Yep. So like when I sold the location, I don't think there was any members that left when I bought a location. I mean one thing, I changed up the business model a little bit, but I made like, I lowered the prices and that was like their probably biggest change."
00:49:27,"Yeah. Right. Like besides, like besides that. So membership members don't care. Don't care. Yeah. I think that's just important for owners to hear. Well, we have an outsized concern about community manager turnover. Like if you look at someone's Google reviews, they're almost always referring to the team member. Right. Because that's their experience with the space. And we know community managers turn over very consistently and the business survives."
00:49:58,"You just. Well that's, that's important to remember is like now that like I wasn't the, the community manager, like I was doing a lot of that being like forced into. I was not giving them the best experience. Yeah. Like my community manager does a better job. I have other things I need to do and I'm sorry. And I like you can just do things and say I'm sorry all the time."
00:50:19,"They care about that. The Community manager they care about. And that does change. And you do have processes in place overlying ownership. They do not care. Yeah, yeah. So that's an important thing to. To be able to separate yourself. When I sold my location, I was very much surprised by how easy I was able to move on. Yeah. Like, logistically, figuratively and literally. Yeah. Yes, yes, yes. It was."
00:50:50,"It's. You know, you do it once or twice and you're just like, okay, all right. Like I am. This isn't my only identity. Yeah, yeah, yeah, yeah. For some people think it is, but it's healthy to extract yourself from you. It was. It was very painful. We. We had to move my original location because the building got sold after 11 years of being there. And you know that there were a lot of memories."
00:51:17,"Yeah, I. I was not expecting. My firstborn daughter has the middle name that. That lock that that street was. Location was on. It was emotional for about four weeks and it was fine. You know, it was fine. Yeah. So. Okay, Craig, we have to wrap this up. Thank you for sharing. And I think everyone listening is. Probably has learned a lot and maybe some wheels are turning, which is, you know, I think part of the hope too."
00:51:49,"And I think we have to do this again, like in a year, and you can tell us what you've learned and what your experience is. I think it'll be fun. I'd be happy to. We're going to tell you that we have 12 locations in one year. Yeah, totally. Yeah. I love it. Well, congrats and I'm excited. Thank you, Jamie. Thank you. Okay, we'll. We'll catch up again soon."
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