Economy and Coworking – Chapter 6

Chapter 6

Sharing is caring: An economy of trust and other things.

Some people have heralded coworking as part of the solution to fix our broken economy, to understand why we need answer a few questions: How does coworking fit into the bigger picture of economic ebb and flow? What economic effect does it have on the individuals involved? How can it serve the economic climate in the future?

Daniel H Pink tells us:

“To truly understand where the economy is heading, you need to get to know free agents — who they are, what they do, how they work, and why they’ve made this choice.” 1.3 Free Agent Nation

This was 2002 how much of this still applies and why, how much does coworking play a part in this?

This rise of coworking and collectives and other new work spaces all come under the bigger banner and current trend of collaborative consumption – why buy my own in the current climate when I can share with others a resource we all need and can effectively share with the new ease of access. But this trend doesn’t look like it’s just for the current economic climate, we are changing our habits and going back to some basic values that had gotten lost a little in our dense urban areas, where distrust didn’t allow us to share and a history of commercial propaganda encouraged us to own.

When I talk about neighbourhoods in chapter 5 I talk about the problem of disassociation and distrust in urban areas, that people need to be empowered to take action within their community. Trust needs to be reinstated locally in the way it is being established in our online world with our online communities. In her recent TED Talk Rachel Botsman states that the currency of the new economy will be trust that our:

“Reputation is becoming a currency that will be more powerful than our credit history in the 21st century” 2.5

A big statement from Rachel but it’s not hard to see this becoming a reality when we look at the success of airbnb, TaskRabbit, Uber, Zipcar and other peer to peer services.

At the MIT Centre for Big data conference quoting Airbnb CEO Brian Chesky, Mike Olson told the crowd that, by the end of this year (December 31st), the company will be filling more room nights than Hilton Hotels. This is a huge milestone in the trend, Airbnb is the catalyst that will help more and more people change their behaviours.

“But not only is Collaborative Consumption driven by consumer motivations that extend far deeper than cost savings, the habits started to stick and spread before the financial collapse of 2008. Economic necessity has just made people more open to new ways of accessing what they need” 1.1

These platforms, Airbnb, etsy, Taskrabbit and Zipcar, are enabling what is known as micro-entrepreneurship – monetising your personal resources and creating new financial opportunities on a individual scale. And this in turn has other effects on local and global economics,

“Airbnb guests contributed $56 million USD in economic activity to San Francisco between June 2011 and May 2012” 4.30

We do though need to be careful when looking at this trend of collaborative consumption and the economy of trust that Rachel Botsman talks about as some things are currently the privilege of the middle classes and those who have ready access to the internet that they can make the best use of these services. Also it remains to be seen that similar patterns would work in other industries. Interestingly the people who could sometimes benefit the most from the ethos of the sharing economy have the least ability to access the services, to get online to find free furniture on Freecycle, to have a car to pick up the furniture, to access information on clothes swaps and home help from Taskrabit (useful for the elderly).

But for coworking these things only acclimatise us to the notion of sharing, and reputation based services, It’s an easier leap of faith to consider sharing your office with a stranger on Desktime than it is to share your home on Airbnb.

Currently the recorded 2000 plus coworking spaces worldwide are not nearly enough to accommodate the Current and predicted Mobile Worker Population, According to the IDC (Information Data Corporation) the mobile worker population is to reach 1.3 Billion by 2015. 4.7

“After all, even if there were 11,000 U.S. coworking spaces – roughly the number of U.S. Starbucks – with 50 members, they would only be serving 550,000 workers. This is less than 1/2 of 1% of the U.S. workforce and less than 4% of the number of independent workers.” 4.31

In 2012 Independents Contributed About $1,000,000,000,000 to the U.S. Economy  4.7

This is where Big Coworking and Coworking Franchises must be considered. Betahaus in Berlin offers several floors of coworking space, event space, workshops and a cafe. 1871 in Chicago boasts 50,000 square feet of coworking spaces accommodating entrepreneurs and startups in the Chicago area. Bigger yet Club Office in Germany has 9 stories, 80,000 square feet of space. Other longer established coworking spaces are growing their space to accommodate for demand, WeWork in New York, Indy Hall in Philadelphia. These larger spaces benefit from the economy of scale, they become more efficient and can begin to create profit whereas smaller spaces often only break even.

1871 in Chicago is a not for profit but it’s purpose is to support the tech industry by providing space, advice, education to local startups. At only 6 months old 1871 is still very much experimental and hasn’t proven itself yet but the prospects of the effect of such a space on local growth in the industry are high. One thing that points to the future success of coworking is that spaces like 1871 create positive press around the industry, and encourage governmental initiatives and other economic development agencies to see coworking as a valid contribution to creating sustainable growth. The running of these spaces is also extremely sustainable, a space accommodating over 100 members can be run by 1-2 individuals, 1871 deal with 500 people through the space everyday with team of only 7 running it.

These Big Coworking spaces are more than just coworking they are a hybrid of Incubator, Coworking Space, ‘Coffee shop +’ and BarCamp. They offer much more value to the community around the space by connecting with local government and initiatives, by being less niche. The bigger these spaces get though the more difficulty they have dealing with the important aspect of community (See chapter 4)

Take aways

Coworking can be the facilitators of these new economic patterns such as sharing, tech communities, micro-entrepreneurship. Work on your own and trust in others!