Loosecubes: A Closed Door Too Far?


On Friday November 16, coworking network Loosecubes will be closing its doors for the last time.

The demise of this popular global network of shared office space has come as a shock to the workspace world. In June this year, Officing Today reported on Loosecubes’ successful acquisition of $7.8 million in Series A financing – a positive move that seemed to spell huge leaps not just for the Loosecubes commission-based model, but for the coworking movement in general. Now, just five months later, Loosecubes is shutting down.

What went wrong?

While the official reasons have yet to be released (as of yet, Loosecubes has only announced its closure, not the reasons why) there are a few possible theories.

Alarm bells first rang out in July 2012, when Loosecubes announced that they were going “invite-only”. Initially, anyone who found the site could browse and book workspace, like any open web directory. After July, the ability to do this was restricted to current members, and afterwards, members’ friends – effectively shutting the door to ‘outsiders’. As Loosecubes put it, they wanted to allow “current members to bring in new respectful and productive coworkers and hosts” – leading to a community of professional “friends of friends.” Members were encouraged to “think hard” about who they would like to join.

Was this a closed door too far?

According to Mike Sullivan of Alliance Virtual Offices, creating exclusive clubs of friends is a marketing idea that has been used successfully for decades, even centuries. “But if you don’t have a financial model down, and you significantly limit yourself to friends of friends… how will you ever be able to scale?” he asks.

The question of financial model rang other alarms. Chris DiFonzo, Founder & CEO of OpenDesks – which he created around the same time as Loosecubes – explains that Loosecubes had chosen to focus almost solely on coworking and independent professionals.

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“This crowd is very social media oriented and coworking had gotten a lot of media attention over the last few years,” he said. “Loosecubes did a phenomenal job of getting press attention and being a global thought leader. They built a great brand and had HUGE momentum.

“They were really in touch with one segment of users and one segment of suppliers – coworking spaces – but they quickly alienated the business crowd with their brand.”

He explained that Loosecubes took an “extreme turn” with its business model earlier this year by attempting to make it ‘free’ for a while, and later subscription-based. “Doing this devalued the offerings of professional business centers and completely alienated owners and operators of these spaces,” he said.

It meant for a time that all ‘cubes’ became bookable for free by members. For suppliers to stay on the Loosecubes network, they were required to offer something for free for a period of time. “It seemed ludicrous,” Chris added.

The invite-only model also jarred. Coworking is cherished by independents for its flexibility, community ethos and affordable workspace. “Not only was the invite-only model a bad marketing move, but it was contrary to the ethic of openness and collaboration in coworking,” added Chris.

Did Loosecubes take a wrong turn by focusing too heavily on the coworking movement – rather than broadening its reach with access to other services such as meeting rooms, similar to OpenDesks? Was the invite-only model the nail in the coffin? Is there even any future in trying to integrate coworking spaces with a commission-based business structure?

Many questions have yet to be answered. Coworking itself appears largely unaffected, continuing its steady march onwards and upwards. But the real challenge seems to be in finding the right balance between connecting people with coworking places, creating enough revenue to make it a worthwhile venture, and keeping enough doors open along the way.