The Role of Coworking in Our Newly Adopted Work Anywhere Culture | Sam Marks

ABOUT THIS EPISODE

Sam Marks, founder and CEO of Coworker.com, chats with Alliance CEO Frank Cottle about the findings of their Future of Work Report. During this podcast episode, Sam discusses the shift they are seeing from open coworking to a hybrid mix of workspace offerings, and the value of workspace communities in our post-Covid landscape.

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Transcript

Frank Cottle [00:00:17] This is Frank Cottle. Welcome to the Future of Work podcast. Our guest today is Sam Marks, an entrepreneur and an angel investor who’s been working remotely since 2008. He’s currently the founder and CEO of Coworker.com, a leading global marketplace for coworking spaces. Sam, welcome.

Sam Marks [00:00:40] Frank, always a pleasure to connect and thanks for having me on.

Frank Cottle [00:00:43] My pleasure. Absolutely.

Frank Cottle [00:00:44] You know, we’ve had some conversations in the past, shared experiences and shared data back and forth on the industry. I’d see that you just recently did a pretty handy future of work report. Seeing as Allwork.Space has been writing about the future of work and dealing with that for quite some time, tell us a little bit about what’s in your report. What do you think are the highlights?

Sam Marks [00:01:11] Sure. We, like so many other people in the industry and in the world, are trying to understand a little bit more about the effects of Covid-19, particularly on the industry, and navigate what it’s going to look like and how it’s going to shape the future of work and the future of workspace. And so what we did is we — this was actually relatively early on in Covid, at least in the Western countries — but we put together a survey and just sent it out to a collection of the different lists that we have both on the user side and the space operator side. Just to understand what really the effects of Covid were in the workspace and also what their plans were post-Covid, looking out into the future and just trying to get a better understanding of where we are today and what the future will shape up to be.

Frank Cottle [00:02:08] Sam when you reference in the workspace or the workplace, are you referring to within the flexible workplace industry or are you referring to the workspace or the workplace overall? How encompassing is that term for you?

Sam Marks [00:02:22] It’s a good question. So we put this out to our flexible office operators, but then we also put it out to our users. And our users are a combination of people that are working in flexible office space from home and also in corporate workspace. But we primarily oriented the survey towards what is it like working remotely, as we know in the USA, at least going back to the peak of Covid, ninety eight percent of the U.S. workforce is working from home. So we kind of oriented towards what is it like working from home and what will things be like for you after Covid lifts?

Frank Cottle [00:02:59] I think we’ve all experienced a lot of — I wouldn’t say challenges so much as adaptation. We’ve had to adapt to the change. You can almost get a little bit Darwinistic in that regard and say the people that have adapted the most rapidly to the changes have probably been the most productive.

Sam Marks [00:03:21] That is a great quote by Darwin. And I think that’s extremely timely for where we’re at today. How about you, Frank? I mean, what’s been the change for you before Covid? Were you primarily working from home or an office or otherwise?

Frank Cottle [00:03:36] Otherwise, I think. I’ve worked remotely almost all of my career. You know, I started in the yachting career and working for me was in the cockpit of a big racing sailboat.

Frank Cottle [00:03:53] So I’ve always traveled, always worked remotely. I had my first luggable computer, wasn’t quite a laptop or a portable, but it was luggable, like a small suitcase. I think it was 1980 or 1981. I had my first video conferencing system that I used in my own buildings and centers in ‘84. So the whole process of using technology to enhance work has been part of our work for our own companies’ process and my personal process since day one. My first mobile phone looked like the size of a small suitcase in the trunk of my car with this big whip antenna that went from the back of the car all the way over and connected to the front bumper. That was in ‘72, ‘73. I looked like an old police car or something.

Frank Cottle [00:04:51] And you had to, it wasn’t Duplex. It was Simplex. So when you were done, you had to say ‘Over’. Worked work through marine operators and things to make phone calls. So I’ve just always been an early adapter to technology.

Sam Marks [00:05:08] You were a pioneer of this movement. It’s nothing new to you!

Frank Cottle [00:05:15] The pioneers get stuck full of arrows and the guys that build the railroads, make all the money! So tell us a little bit more about your survey and what you felt were the big “wows” that came out of it.

Sam Marks [00:05:31] Sure thing. So we’ll start on the user side, the remote worker side. So the biggest perk of when we surveyed all these people, what was the biggest perk of remote working? So all these people for the first time in their life, they’re working from home. Theoretically, I guess they could work from anywhere, but their choices are very limited because of Covid. So almost all of them were working from home. And the biggest perk was flexible schedules. 74 percent said that this was the number one perk that they had from remote working. And that was followed by the second perk, number two perk, seventy percent said it was being able to work from anywhere. So being able to choose their location, even though that during a pandemic, obviously location choice has been limited. But I think a lot of those people for the first time that are working from home see the beauty in possibly exploring the thought process of being able to work from anywhere for the first time. So it came down to the survey. Those were the two biggest perks and the reasons why people enjoyed remote working. What do you think about those two things, Frank, being an early pioneer in this?

Frank Cottle [00:06:45] Well, I wonder if the flexible schedule response came in great part from the lack of commuting. People gained an extra hour to two hours a day of time. And if that time was applied across the spectrum of work life, that’s a big difference. That’s a 10 to 20 percent work life gain that they’re able to accomplish just from that one thing.

Frank Cottle [00:07:22] Working from anywhere, I think, caused a lot of people to recognize you can be productive, maybe even more productive by having that work life schedule and that you don’t have to necessarily just be at the formal office in order to accomplish your required goals. That recognition, I think, is going to cause a lot of people to reassess and a lot of companies to reassess. I don’t know about Coworker.com, I imagine your numbers are the same as ours over at Alliance Virtual, but all of our numbers and all the productivity of the individuals within the company went up during Covid, not down.

Sam Marks [00:08:06] Yeah, workflow-wise… nothing changed for us. We’re already almost entirely a remote team. We’re working on centralizing our operations in Barcelona. And then when Covid broke out, I said, well, that’s not going to happen for probably another year. So back to fully remote, but absolutely nothing changed for us in terms of workflow. But I do think… coming from a background in technology companies and always having a large presence as remote first and team orientation, it is amazing to me how many companies out there for the first time are using video conferencing or messengers like Slack. I guess I just assumed that all companies had an element of that. Companies are just, a lot of companies are totally lost in this world. But, yeah, to your point, even if they for the first time are doing some type of remote work or decentralized collaboration, a lot of companies are finding that it wasn’t as big of a disruption to our process and workflow as we had originally thought it might be.

Frank Cottle [00:09:15] It’s funny. I was in New York the first part of December, and I was speaking at a conference that was mostly Fortune 500 attendees, a lot of CEOs and the heads of strategic planning, that sort of thing, and we were talking about flexibility in the workplace. Most CFOs that were there sort of had one foot over the threshold. But they’re trying to combine the H.R. department, the facilities managers and the marketing groups and all the different groups and come up with the perfect, flexible workplace plan. The perfect plan for their company that would be unique and motivate everybody and help them to win the talent war, for crying out loud. And then January came along and they didn’t know what was happening. And February came along and they went, whoops, somebody just kicked them right in the ass, right through that door over the threshold.

Frank Cottle [00:10:18] And automatically, they were remote. They had a remote workplace program. Then by April and May, that same CFO was wandering around the totally empty corporate headquarters, scratching their head, saying the place is empty, the company is running just fine. What do we need all this stuff for? I think there’s going to be some major changes in the way we use real estate in general as a result of this.

Sam Marks [00:10:47] That is one of the biggest unknowns to me is what is going to happen with all the commercial real estate. And, you know, to your earlier point, Frank, about productivity. When we survey the people, eighty two percent of respondents said that they were more productive, working remotely. And this point, I can definitely speak on an individual level about, because when I go to use a coworking space in my daily life before Covid, I would always kind of carve out my own area or have my own dedicated desk or even my own little private office. And when I walk into team environments now, I feel like I get nothing done in a day. Of course, meetings are great. Collaboration’s great. Ideas fuel more ideas. But I think because I’ve overloaded my daily to do list in such a format, because I’m used to working sort of with headphones on in a box all day, when I get into more of a team environment, I basically get nothing done. So I’m massively more productive, working remote and or working alone outside of a team environment. And I wonder if there’s a lot of people out there now for the first time actually seeing what it’s like to almost have their own private office in a way, versus working in a work team structure.

Frank Cottle [00:12:07] I think that’s important. I would agree with that in terms of a work process. I am by far more productive when I’ve got my blinders on. But, you know, it’s funny when you reference coworking and then you reference teams and you reference almost your own half; when you started going into coworking centers, you were sort of a digital nomad. When you just described your last experience, you were running the company. And I’ll make a broad statement that some people might like, others might not. But I’ll say individuals co work.

Frank Cottle [00:12:51] Companies require privacy.

Frank Cottle [00:12:54] They have their own IP. They’ve got their culture. They have their own thing. They want to still be within a community, a larger community. But the concept of sitting at a work bar versus having a private office or a team room for your own group is really seen as a transition within the coworking world to where more and more private space is being built. Even though the center still has the vibe and the concept and the closeness of community. Have you been seeing that as well in the structures of centers?

Sam Marks [00:13:33] Massively, massively. That trend was already apparent in our data. But with Covid, it’s just becoming a massive accelerating force. So that, yeah, that was already shifting drastically. And then Covid is going to just put a shot of adrenaline into that. Even in terms of inquiries on our site prior to Covid, about twenty eight percent of inquiries were for private offices. Now we’re not even post-Covid right now, but it’s already shifted to sixty one percent, I believe. High 50s, low 60s. So that’s a massive change and shift in demand to private offices. And that’s obviously quite understandable with Covid lingering. But I think more and more you’ll see the move towards private offices and less towards desks. And it seems to be a better business model for the spaces as well.

Frank Cottle [00:14:33] I honestly think it is. I remember I was one of the very first coworking meetings, large coworking meetings that were held, several hundred people there. Everybody was all excited. The industry or the sector within the industry was just starting to figure out what to do. And I was in an open session talking about space design planning and everybody was saying open this, open that, and I made the mistake of speaking up and I said, you know, about every year you’re going to take 10 percent of that open space and convert it to private offices. I literally almost got thrown out of the room! But, you know, there is a proper blend and I think what we’ve seen in the flexible workspace industry is a hybridization between the classic older style, hundred percent private office business center, and then the new coworking center as it started, which was 80 percent open space and a few private offices and conference rooms, to where the two of them have found a much better blend now, as we often do in business and life, of saying, well, what’s the right mix of those things? But the importance in getting to that mix is the preservation of the concept and the strength of community added to the whole blend, which we used to call networking, but it wasn’t as strong.

Sam Marks [00:16:16] I agree completely. I think that’s what a lot of people right now in this pandemic environment are suffering from. It’s that lack of community. It’s loneliness. It’s not having that social interaction each day that they’re used to at work. So another stat actually from the survey is that on the negative side of remote working, what did people say that was affecting them the most? Forty seven percent said they’re lonely. Fifty five percent said they were distracted at home. And I think both of those things are addressed by getting into a coworking space, even if you’re in a private office, there’s community amenities that are available and there’s less distractions because everyone that’s in that space is typically on task, versus looking around and seeing all your household items and Netflix and everything else around you. So both those things that people are saying are affecting them negatively,  remote working for the first time, are both addressed by getting them out of their house and into a coworking space.

Frank Cottle [00:17:19] I agree. The problem with being in your house, working all the time, too, is that you never escape the work. That computer is always sitting on the desk or wherever you’ve got it. And every time you walk past it, you’re tempted to do something. You didn’t go through that commute to make the mental and intellectual break between work and home. And I think that’s added to the stress of that loneliness as well. You know, my only friend here is my computer, and I can’t escape it. And I think that that’s impacted people as well. But when you talk about change in the future, I look at densities of our industry, Manhattan, London, Berlin, Hong Kong, places that you’re familiar with in Asia, Beijing, and I don’t think the people that I’m talking to are at all concerned with going back to the office. The office can stay clean, you know, we can hyper clean the offices and we can be considerate of each other. But I don’t know anybody that wants to get on the tube in London. So I think the big change is going to be location changes in the workplace. Getting to the office will be more of a problem than being at the office, as a result of which, secondary and tertiary locations are going to become much more popular. And we’ve been saying I’d rather be on a bike path than on the metro line from a location point of view. What are you seeing in that type of scenario?

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Sam Marks [00:19:20] Oh, it’s identical to what you’re seeing. We just published an article about the rise of coworking in suburban and rural areas. And in a typical month, pre-Covid we’re seeing about three hundred and fifty spaces join our platform each month. Now we’re kind of down around what looks like just under two hundred. So down relatively significantly. But almost all of those locations that are joining right now are in suburban and rural areas. And this is really exciting to me as a flexible office user myself and also someone that’s in the industry, is that if we think about the future, what gets really exciting is to be able to walk to a coworking space. If I have to get in a car and drive 30 minutes to a coworking space, I’m probably not going to do it. I probably just work from home and advise my team to work from home as well. But if I can start my day with a walk to a coworking space or a bike ride or even a short Uber ride or electric scooter, whatever you want to do, you know, get out, get some wind in your face. Then coworking becomes much more accessible to the masses. And we think that’s where it’s going. That’s you know, that’s when you get this massive wave of people that are now working from home, and look at all these companies that are decentralizing their workforce, all these tech companies like Facebook, Twitter, Square, Slack. When their remote team is allowed to work from home, a lot of them will stay home if there is a commute to a coworking space. But if they can get to a coworking space in five minutes by foot or by bike, a large majority of those people are going to end up in flexible office space. And I think that’s really exciting for the future.

Frank Cottle [00:21:07] I agree with you. If you look at the genesis of our industry, the classic business centers followed by the coworking centers, the highest density was always in the central business districts of the largest cities. And they were there for a reason. And I think you hit on it.

Frank Cottle [00:21:29] People could walk there. If you’re building a coworking space in 2009 or 10, you want it to be on a busy pedestrian street. Where people could walk there, take very short term public transportation to get there. It was a very neighborhood-related project and I don’t think that’s changed. I think that the growth, though, will be everywhere as opposed to just in that central business district. In fact, I think it will be greater outside of those districts in the future in the aggregate overall. So I completely agree with it. I kind of like electric skateboards or electric bikes myself.

Sam Marks [00:22:18] I took a really bad spill on one of those Frank, those things are dangerous. Got to be careful.

Frank Cottle [00:22:22] I know it. I know it. But I’m so hardheaded I never seem to have a problem. As long as I land on my head, I’m safe.

Sam Marks [00:22:35] There you go…

Frank Cottle [00:22:35] So within your survey, overall, when you were reviewing or interviewing the workers, were they working from home at the time or were they working in centers at the time?

Sam Marks [00:22:56] Everyone was working from home. So this was after everything was getting locked down in the state. I would say early to mid-Covid, but this was already after everyone had been working from home.

Frank Cottle [00:23:12] Well, you know, it’s funny. I forget the source on this semi-quote, I’m going to give. But the essence of a quote is if you want to change a habit — and I think he was talking about smoking or drinking or some affectation of that nature exercise — If you want to change your habit and you can effectively repeat the habit you want, and drop the habit you don’t want consistently without fail for 21 days, you can break that habit. OK. So if you look at what we’ve just gone through, we have changed some major habits for three months. And we’re still in the middle of it, in many places. So the outcome of the new habits we’ve created, I think, is where you look, when you say what’s the future going to be.

Sam Marks [00:24:12] And what do you think the future looks like, Frank? When it comes to flexible workspace?

Frank Cottle [00:24:17] Man, the future’s so bright I gotta wear shades. I think for our industry, all the next wave, the last wave of new members in our industry, clients in our industry, came from big startups and a little bit from sharing economy companies. I think the next wave — and I think it will be a series of massive waves, the surf just got big — is going to come from government and the global Fortune 1000. If you look at the vacancy factors in our industry on an average basis, and our industry typically runs between 88 to 93 percent occupancy, if you look at a country, a country of choice and you count up all the centers and you say, there are average 90 percent.

Frank Cottle [00:25:14] There’s only 10 percent. They got a little flexibility, so maybe they have five percent available vacancy. And then you take Google. Take Amazon and say, OK, if they take 20 percent of their people and put them in our industry, what do we do? We don’t have the capacity.

Frank Cottle [00:25:37] There is not the excess capacity for those large, large companies. And so that’s going to create a whole new generation of development. And when those companies move out of conventional space, I would just talking to the head of strategic planning from Google yesterday and he was saying, yeah, we think we’re going to be cutting back our use pattern format by about 20 percent overall and having those people work in some form of remote work. So that just means to the landlords of Google that they’re going to be taking 20 percent less when they renew a location. All that extra space is going to be absorbed by our industry because we’re the replacement of choice now. I think we saw it during the last recession period, how the industry grew. And I think it will grow again during the next expansion period, not just the next recession.

Sam Marks [00:26:38] I agree. The future of work is just…

Frank Cottle [00:26:40] So Coworker will double in size, easy….

Sam Marks [00:26:43] Yeah, I hope so. Thanks for closing off that sentence like that.

Frank Cottle [00:26:49] There’ll be twice as many centers in five, seven years.

Sam Marks [00:26:55] Covid, I think through all the death and destruction — and I have to underscore that because I know a lot of people have been extremely negatively impacted both on business and personal levels — but through it all, when there’s a vaccine and when we get past this, we’re gonna see basically a massive acceleration of trends that were already there. Everything was already increasingly going online, becoming increasingly digital. People were already ordering food online for delivery. That’s just celebrated. Work and the workspace was becoming increasingly flexible. And when this lifts, I think we’ll see demand for coworking that may not have been with us until 2025, 2027. That’ll be here just a couple of years ahead.

Frank Cottle [00:27:36] I really agree. How are you seeing that in your leads and in your traffic analysis, at Coworker? What trends are you seeing there? Aside from volume trends.

Sam Marks [00:27:48] Well, not surprisingly, leads have shifted significantly to a point where it’s indicating corporate demand. So leads and inquiries have gone higher capacity. So pre-Covid we were seeing an average capacity inquiry of 4.5 people. We’re now and again we’re not even post-Covid yet, but in that direction, the average capacity is over six. Durations have gotten longer from kind of a few month duration to more than six months, average inquiry. And then, like I said earlier, private offices are now making up the majority of inquiries where before it was only in the high 20s. So basically, you know, hot desking and open seating for the most part is kind of dead right now. Meeting rooms, for the most part, are dead. But private offices are surging in demand, and across the world it’s pretty interesting looking at markets on an individual basis, because in the US we’re seeing traffic still down about 60 percent and leads are down even further. So we kind of look at traffic as an indication of future demand where leads and inquiries are an indication of current demand. And across APAC is where we’re seeing the most strengthen in both. So Australia, for instance, right now is our strongest market. It’s recovered well past previous traffic demand and lead demand. Singapore and Hong Kong are also very strong. Taiwan is strong and then the Western countries, the UK is still down, really significantly. The U.S. is down more than 50 percent. So we are seeing a lift in where Asia and APAC kind of had the early wave of Covid and in a sense made more of a general recovery than Western countries. Now we’re seeing demand that is surpassing where we were previously. So we’ll keep fingers crossed that the same will happen in Europe and North America and follow suit.

Frank Cottle [00:29:54] I agree with you that the larger companies will be driving the volume. What you’re seeing in this six or six plus is what we’re seeing also in terms of the need for space. Six, seven is probably the mean average. And so we can correlate our data in that regard. One thing that you mentioned was interesting — I think this plays with that crystal ball for the future — you said that you saw the lifecycle of a customer lengthening a little bit. And one of the things, if we look at entrepreneurial customers, they come and they go as their companies succeed or fail or change shape. Large corporates might take ten workstations for private work, a team room for 10 or seven or whatever; the people may come and go, but the corporation generally stays as a client.

Frank Cottle [00:31:02] So large corporates have a longer life cycle than many others in our industry. And I think that lifecycle of occupancy is a huge impact and strengthens the underlying revenues to the industry and its profitability.

Sam Marks [00:31:23] I agree completely. I think this is all going to be positive for the industry. Just got to bite down in our mouthpiece and pull it out. But I do think we’ve got to suffer a really tough year. But if we get through it, you know, we’re gonna reap all the glory in the years ahead that we wouldn’t otherwise achieve for even further out. So I hope that everyone out there listening that’s in the industry is persevering as best they can and holding tight, because I think all the signs that we’re seeing and data and trends all point to a much brighter future, like you said, Frank.

Frank Cottle [00:32:01] I believe that’s true. So we’re running short on time here. If you were to have one amazing final parting comment or two, we’ve already talked about the industry and this and that… what major change or what major thought might you want to leave people with?

Sam Marks [00:32:24] I think the future of work and the future of workspace is flexible. And that really excites me because that’s how we started the business. When I walked into the first coworking space in 2015, I got extremely excited because I was what the majority of people right now are doing. And you’ve been through this, Frank. But I was working from home, and working remotely. And when I first saw a coworking space and I saw Tesla was taking out space and Uber was taking out space, but then there was this whole group of entrepreneurs and small companies that were also taking out space in this particular coworking space in Hong Kong. And that got me really, really excited. And, you know, I wanted to create a platform that enabled the discovery of these places around the world. So I thought it was better, you know, better for me as an individual. It’s better probably for the world when you get smart people in a room together and give them a productive workspace. And so this big wave of people that are now for the first time working from home and these companies that are experiencing remote work and a remote first workforce for the first time, it’s going to stick. And a lot of these people, they’re working from home now, will go through this honeymoon stage of loving the work from home as compared to sitting in a corporate headquarters all day, and that commute. But over time, that honeymoon period for most people, I think will wear off and they will want to get back into a flexible workspace. So I believe that the future is extremely bright and I’m looking forward to it personally. And on a business level.

Frank Cottle [00:34:00] I agree with you completely. It’s funny you say the future of work is flexibility. I would sum that up from a corporate point of view, that five years ago, or even a few years ago, in order to succeed as a company, you needed a killer product and access to capital for growth. Today, you need a killer product, access to capital for growth, and flexibility. Flexibility, whether you’re a large company or a small company, is now key to any growth strategy that you have. And if you forget the flexibility, whether it’s in, no matter how you’re applying it, you will not succeed competitively in the future. So you’re right on when you say that you believe flexible workspace is the future and a critical element for all of us. Well, Sam, I want to thank you very much. Tell everybody how we can reach you if they want to.

Sam Marks [00:35:06] Sure. Frank. So our core website is coworker.com. And my email, extremely easy, no surprises, [email protected] Feel free to reach out. And Frank. I really appreciate you having me on. It’s been a pleasure to catch up personally and also on a business level. And I extend you a hearty handshake from Charlotte, North Carolina.

Frank Cottle [00:35:32] Well, from the sunny shores of Newport Beach in California, it’s coming back to you.

Sam Marks [00:35:37] I’ll trade you.

Frank Cottle [00:35:40] Ok Sam. Thank you.

Sam Marks [00:35:41] Thank you, Frank.

Frank Cottle [00:35:42] Bye bye.

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