I was recently privy to some documents (from whom I will not name) regarding a coworking investment opportunity. The group is essentially approaching investors with a bunch of stats, likely pulled from CBRE reports or the Global Coworking Survey. Things like “the average full membership holder only uses a space for an average of 23.5 hours per week.” They go on to compare the coworking model to a gym, and that really irritated me for some reason.
In the past, I used to compare the coworking model to a gym as well as a bunch of other things. It’s tempting to compare coworking to things it’s not, but it’s not a great thing to do because the truth is coworking is nothing like the things we compare it to, especially a gym… not at all. I believe Alex Hillman wrote an article on this once.
The argument for comparing goes: “Coworking is like a gym because people sign up for full-time access, but don’t actually use the space full-time. Just how with a gym, members sign up, and they only go a few times a week or even completely forget they have a membership at all. See, coworking is just like a gym.” Wrong.
Here’s the reasons coworking is nothing like a gym:
- The first reason: gym memberships are far cheaper than coworking memberships. They are cheap enough to forget about. What’s more, they provide full-time access for that low monthly fee. There are no part-time memberships to gyms that I’ve been to and the most I’ve ever paid for a fully-stocked gym was $30/mo. It’s easy to forget about $15-30/mo compared to a $200-600/mo for a coworking bill. This first reasoning makes the second reasoning possible.
- This second reason: going to the gym is something people do not want to do. Working out sucks, at least for the sane among us. People sign up for the gym to make doing something they hate, but that they feel they must do, just a little easier. For most people it doesn’t make it easy enough so they never or rarely go. The membership is held onto because, “well, I might go.” On the contrary, people like going to coworking spaces. The benefits of going far outweigh those of not going to any good coworking space.
Yes, if you make your awesome coworking space $30/mo I’ll sign up, and maybe I’ll forget about it. But if the space is actually awesome it will most likely result in an overcrowded money pit.
So, for the love of whatever thing you find holy (be it your children, a diety of some kind, or your 2-month old goldendoodle) stop making this comparison. It makes you overestimate your projected revenue and revenue per member, it misleads your investors into anticipating quicker and greater returns, and it makes your members feel a little exploited.
So stop talking about member-to-desk ratios, stop talking about daily space utilization. All the BS metrics that we take from the gym world are vanity metrics. They do not matter. The only things that matter are:
- Are you attracting happy, productive, interesting members that like working together?
- Do they pay you enough money to keep the lights on and make a healthy profit?
Everything else, all of your tasks and projects, disseminate from these two questions.
