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When is the right time to splurge for formal office space?

I am struggling with this one. As a bootstrapper, it feels like a waste of capital but the value in bringing the team together day-to-day is invaluable. When did others pull the trigger? I am also a big believer in building teams "in the cloud" so I may have a different perspective than most.

14 Replies

Michael Sattler
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Michael Sattler Entrepreneur • Advisor
President, Splitzee
I'm a big fan of virtual teams as well - the tools we have at our disposal these days are awesome in that regard. Our range of options provide a spectrum of "bandwidth efficiency" for interactions between people. I heard a client put it this way the other day:

Paper < Email < Voice < Video < Face To Face Meeting

The idea is to pick your mode based on what needs to get done. Routine, low-intensity information exchanges can do pretty well on the simple end of the spectrum, but with complex, creative, high-intensity tasks, opt for the complex side.

The truth is, for most forms of work that require individual concentration and effort, staying virtual is actually preferable. But the moment interaction is required, face-to-face is far superior. Having your team co-located increases the *velocity* of those interactions - the speed and frequency with which they take place. Planned meetings, hallway encounters, whiteboard sessions - all offer a tremendously positive return on time spent, which for a startup is everything.

I advise my startup clients to co-locate as soon as they can afford to do so, especially once customers and deadlines are actively involved. A garage is fine - no need to "splurge" unless you're in recruiting/employee retention mode.
Pablo Fernandez
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Pablo Fernandez Entrepreneur
Founder at Digital Possibilities
Hi Lydia,
I am alsobootstrapping my company. We are two partners and a couple of employees building custom web and mobile softwarein Montreal and also working on a couple of products prototypes.
We decided to have our own office space since day one and I never regretted it.
To keep the expenses low we looked for shared offices. We have our own closed office but share common spaces, like reception, kitchen and most importantly conference rooms.

As you said having the team together is very valuable. For us is also important to have access to conference rooms where we can meet clients.
The times we tried with employees working from home it wasn't productive at all. Of course it would depend on the people you have in your team.
I also like brainstorming with my partner and employees a lot, for that there is nothing like being on the same room.

I hope this helps.



Lydia Loizides
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Lydia Loizides Entrepreneur • Advisor
Founder and CEO @GGGrit
Michael - valid points. I will tell you however, in the tsunami of co-location/incubation/acceleration in NYC, the costs have skyrocketed. I actually looked at space last week where someone wanted $1k PER DESK - no wifi, no phone and a dot matrix printer(well, it might as well have been!)Itwas insane. But I hear you ...
Paul O'Brien
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Paul O'Brien Entrepreneur • Advisor
Tech Economic Development and VC CMO
Coworking, coworking, coworking.

Everyone should be part time at 2-3 places. Couple hundred bucks a piece and you rotate throughout the week. The benefits of connecting with the community therein; hiring, finding partners, business development, networking, etc. are invaluable. But that doesn't answer your question....

Teams of 3-4 people can and should be working this way. Work from the same place once and a while, spread out and work in different places on your off days. Depending on the business or service you provide, I've heard of teams of 20 working throughout a city in coworking spaces (design firms, development shops, etc.). Imagine how quickly those companies established their brand and developed a sales pipeline when they are located in every shared space in the city?

When should a business or startup needing to spend most of it's time together really have an office of it's own? At least 7 people. I really believe that it's the size that matters; more than the reasons you believe.

We're hiring developers overseas, marketers and sales professionals throughout the country, and executives who's commute makes working with you prohibitive.... don't be fooled into buying Silicon Valley's mantra that you have to be in one place, be there, to be more successful. The tools and technology exists today with Podio, Skype, etc. that the reason you need to be in the same office is that there are so many of you that being distributed is no longer feasible and the opportunity cost consideration, of having your people all over town meeting, networking, and evangelizing your startup, changes.
Donald Cramer
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Donald Cramer Entrepreneur
CEO - Founder at Rocket36
Lydia:
In building product teams there is a great value in having the team under 1 roof. I managed virtual teams (in multi-states and China). I myself was a telecommute team member. Overtime we worked on clearing the barriers of communication (video screens of team members in the office at all times) until the group was ultimately restructured to be in a couple of offices (dev in one location, q/a in another). Once done, productivity shot up!

The costs you mentioned in NYC are just crazy. In Las Vegas we just opened a new co-working center called Work In Progress. Dedicated team room space for 4-6 is starting at $1,000 per month including utils, wifi a kitchen.
Vadim Oss
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Vadim Oss Entrepreneur • Advisor
Co-founder at Rentini
Hi Lydia,

We've been working off two co-working spaces in New York city. Check Sunshine Suites New York and WeWork. Sunshine is more cost effective, they charged us $275/person for shared space and $375/person in separate cubes for 4. You do not need to pay for anything else as it's all inclusive. WeWork is little higher in price range but you gotta see the space to understand the value. They have beer and stuff available 24/7.
Let me know if you need a reference. I can hook you up with building managers in both Sunshine and WeWork. They will give you a private tour around.

Good luck!
Lydia Loizides
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Lydia Loizides Entrepreneur • Advisor
Founder and CEO @GGGrit
Vadim - an intro would be greatly appreciated!
Lilia Tovbin
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Lilia Tovbin Entrepreneur
Co-founder at BigMailer.io
I am alsobootstrapping and not considering a permanent office anytime soon, mostly because I prefer not to limit myself to local candidates. I have a great relationship built with my freelancers working remotely. I do think there are enough options for temporary meeting space that it can be sufficient for getting a team together once in a while or as needed basis.

Lydia, some virtual office companies offer meeting rooms on both hourly and daily basis, see http://www.virgobc.com/meeting-roomsso you could actually have a physical address on your business cards and web site that matches where you send employees and clients for meetings as well as where you receive your mail.

Paul, love your suggestion to actually work in various office spaces as a way to network.

I am curious to hear how people decide on hiring FT employees versus PT or freelancers, since that relates to having/needing an office space somewhat.
Lilia Tovbin
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Lilia Tovbin Entrepreneur
Co-founder at BigMailer.io
Here is another coworking office space in NYC -http://nwc.co/- they have updated their membership plans since the last time I checked them out and offer more flexibility about commitment level.
Lydia Loizides
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Lydia Loizides Entrepreneur • Advisor
Founder and CEO @GGGrit
Lilia - these are great. Thanks so much!
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