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Co-working growing pains

Monday, 12 November 2012 | By Nina Hendy

feature-cluster-thumbA growing number of start-ups are claiming co-working spaces to be their secret weapon, giving them a competitive edge in their quest for world domination.

 

For as little as $120 a week; or even less; landlords are offering start-ups their own space in a trendy inner-city shared space.

 

Landlords are dangling various incentives to lure bright business minds into these spaces, including access to a shared receptionist, yoga classes, IT support, social functions and even free kayaking.

 

Start-ups that have used these spaces claim they give their business the chance to rub shoulders with like-minded entrepreneurs, get free business advice, share vital business services and, in many cases, find some of their first clients among others sharing the space.

 

The largest co-working space in the country is Fishburners in Sydney. The 1000sq/m co-working space for professional tech start-ups charges $200 for up to three days per week a month; or $300 for up to seven days a week a month.

 

fishburners

Above: Fishburners

 

It also offers free trials for selected start-ups and has been a launching pad for around 150 start-ups since its inception 18 months ago.

 

Fishburners advisor Pete Cooper says similar spaces are opening all over the country, with at least four others in his street and at least six more nationally.

 

“Internationally, the scene is similarly growing, but international commentators say we are growing faster in Sydney than most cities around the world,” he says.

 

Sydney is also home to The Refinery Studio, which opened on Sydney’s northern beaches in June.

 

In Melbourne, there’s Inspire9 in Richmond, which is home to a product designer, a marketer, a photographer and several writers, among others. It offers start-ups a free trial period.

 

Fellow Melbourne space Epic Office Share also offers open plan desks and lockable offices. It also brokers member discounts for products and services including banking, mobile phone use, IT support, computer hardware and electrical goods.

 

But are these spaces really giving start-ups a competitive edge? Or do the costs and distractions of working shoulder to shoulder with others also starting out in business negate any potential advantages?

 

The advantages

 

More often than not, landlords are offering increasingly fancy add-ons to start-ups to move into these co-working spaces.

 

Not only do you get a place to bring clients, an address for business cards, website assistance and reception support, but often a host of other add-ons.

 

The founders of the country’s newest space – a new unnamed operation in the beachside Sydney suburb of Manly – are promising to offer kayaking and yoga to its tenants, for example.

 

Fishburners offers free business management software, unlimited Wi-Fi, meeting rooms, beer, pizza, online tools, discounts and monthly events covering legal, investment, pitch training, rent-a-brain events, developer skills, sports, yoga, mentoring and more.

 

“You never have to leave and some people don’t except to sleep,” Cooper says.

 

Melbourne co-working space The York Butter Factory is home to more than 50 start-ups, many with international objectives in the consumer internet and digital marketing space.

 

Its community manager Sam Stewart says one of its most valued add-ons is access to venture capital in a starved high risk investment landscape.

 

“The culture is one of collaboration, resource sharing and tough love, which ensures our younger demographic learn vital business skills rapidly.”

 

“Furthermore, by strategically partnering with corporates such as Microsoft, Optus and Amazon, The York Butter Factory ensures our members have all the resources required to compete on an international level,” Stewart says.

 

inspire9

Above: Inspire9

 

Getting social

 

Co-working spaces give fledgling businesses the chance to rub shoulders with others turning a serious profit, according to the director of Melbourne’s The Cluster, Kirsten Koci, who says many businesses turn over millions.

 

“They choose to step away from the conventional office and locate themselves and their staff in a space that ticks all the boxes, especially social.”

 

“The chance to mix with other people each day, instead of just their own company is what helps The Cluster attract top businesses and great start-ups and freelancers,” Koci says.

 

A co-working space has worked well for PR practitioner Jocelyn Hunter, who had considered signing up for an expensive office in Melbourne’s central business district a couple of years ago before moving into The Cluster.

 

The add-ons not only encourage socialising with those sharing the space, but also offer office support, joint marketing, meeting rooms and a bookkeeping service.

 

“I’ve found The Cluster invaluable for overcoming the isolation of running a business, particularly in those early days,” Hunter says.

 

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For Mike Gardiner, co-working spaces have given his start-up, Lime Rocket, access to high energy social environments and an injection of diverse skills from fellow tenants.

 

He alternates his time between Wollongong space StartPad and a couple of other co-working spaces in Sydney.

 

startpad

Above: StartPad

 

He likes the fact that the community that builds around these spaces can give small start-ups big visions.

 

“We’ve received referrals to several great advisors, received three high value sales leads in the last month and on a weekly basis, we benefit from ad hoc peer mentoring from others founders in these co-working spaces,” Gardiner says.

 

However, Gardiner admits the nature of these often open-plan spaces can make it hard not to get distracted.

 

“You’re working in this super-fast paced environment alongside other founders like yourself that are also trying to make a dent in the world, doing amazing things.”

 

“Trying to limit the time you spend with other teams can be a challenge but it is one of the things we love so we wouldn’t want it to change,” he says.

 

Growing pains

 

But do the start-ups that begin in these co-working spaces ever leave? Landlords say that some go on to rent their own office space, while others enjoy the back-end support and social life that a co-working space offers them, so choose to stay.

 

Online graphic design hub DesignCrowd used Fishburners as a stepping stone for a few months.

 

The business has raised $3 million of capital, grown from three staff to 17, acquired a US business and launched overseas including in the UK and Canada in the past year.

 

Its current digs are in Surry Hills in Sydney.

 

Founder Alec Lynch says: “We hired a few desks, used meeting rooms to interview potential staff and used it as a base when we were hunting for a new, larger office to fit everyone. It appealed to us because it was cheap and flexible.”

 

Co-working spaces were also a stepping stone for tech start-up OrionVM Cloud Platform, which was based at Fishburners for a year before moving into its own space.

 

The business counts Sydney Buses, NSW State Library and AAPT among its clients and annual revenue has reached seven figures.

 

Managing director Sheng Yeo says while a co-working space offered a great culture, security and privacy were an issue, prompting him to move out.

 

“It was a great way to get a credible address and a work space in the city that all of our team could work from.”

 

“The other benefits that we realised after going to the co-working space included mentorship, great company and being able to find a range of advisors and people who were one step ahead to assist,” Yeo says.

 

But moving out of a co-working space isn’t always a sign of success.

 

Property management software company RentingSmart founder Ben Levi has been a Fishburners tenant since the space opened 18 months ago and has no immediate plans to leave.

 

His fellow tenants help him solve problems in a tenth of the time it would take him on his own, he says.

 

refinery

Above: The Refinery Studio

 

“There is usually someone who has already done what you’re trying to do. RentingSmart is in a better position today due to the Fishburners community.”

 

Finding a co-working space

 

Questions to ask:

  • Many of these spaces specialise in a particular type of start-up, so ask for a breakdown of tenant types before deciding if it’s a community you could benefit from.
  • Ask about the standard services the space provides, including car parking.
  • Speak to other tenants and find out what they love about the co-working space you’re considering.
  • Consider transport options and check out nearby lunch spots and other services.
  • Ask about add-ons and decide if they could really benefit your business.
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