The Next Iteration of Coworking Spaces
Coworking has come a long way. Earlier this year WeWork became the largest occupier of office space in London, second only to the UK government. The growth in startups, freelancers, and digital nomads have helped fuel the demand for flexible, shared office spaces. WeWork might be the biggest game in town, but it’s definitely not alone. Many others have sprung up, offering their own flavour on the flexible office model. Whatever the decor and refreshments, these spaces are usually optimised for software companies, where most of the business lives online.
Two weeks ago I attended the first BeautyTech event in London. During the panel discussion, Sharmadean Reid (MBE), made the point that coworking salons could be of huge benefit to beauty professionals (and by that I mean anyone who specialises in hair, nail or body treatments). The discussion prompted me to think about which sectors could benefit from new types of coworking spaces.
Beauty
Sharmadean is the founder of beautystack, a new visual booking tool for beauty professionals. She’s well-versed in the nuances of this industry, both as a service provider through her new company, and as an independent professional, having founded her own brand and salon, WAH Nails. Her point, summarised below, highlights one of the reasons why coworking spaces for beauty professionals could make a lot of sense.
If you’re a beauty practitioner, you’re going to have to choose between working in a salon or running your own business. Salons provide a simpler setup, taking care of overheads and other admin. The tradeoff involves being subjected to steep commissions and creative restrictions. Freelancing or running your own place might feel like you’re controlling your destiny but the various taxes, rental expenses and other overheads obscure how much you’re actually getting out of it financially.
I don’t think it’s hard to imagine that bridging the gap between these options would be popular. A place with tailored workspaces, centrally-managed overheads, and a fairer fee/commission system so the economics actually make sense for an independent practitioner. I was pointed to Hunter Collective, in East London. I’ve not had a chance to visit but it looks like an example of what I describe above. From a consumer perspective, it’s also pretty attractive — a ‘full stack’ spa where I can get everything done from hair, nails, lashes and beyond. Another great thing about beauty and wellness is that the demand for it exists everywhere. These type of spaces don’t have to be located in central London but could fill up across the country (and globally).
What about at-home services?
There’s a growing list of startups trying to become the platform of choice for ‘at-home’ beauty and wellness services. Depending on the fee structure, this is a great option for freelancers that are happy travelling to clients. That said, you’re going to have a hard time convincing me you can replicate the escape and sheer magic of a salon, in my apartment.
Brands
By brand, I’m referring to any digitally native company that sells physical products directly to its customers. You know those ads from brands you’ve never heard of that are offering you 20% off in the middle of your favourite podcast? Those guys.
Much has already been said, written, and tweeted about the rise of digitally native / direct-to-consumer brands and their effect on the retail ecosystem. The explosion of new brands in almost every conceivable category has been made possible by more accessible supply chains, advances in third-party logistics and sophisticated online commerce tools (hi Shopify). This has allowed teams to side-step traditional retail channels, the associated markups and interact directly with customers. Whether they’re selling makeup, suitcases, glasses or apparel, the promises made to the customer are similar: More value for money by cutting out the middleman and an unrivalled shopping and fulfilment experience.
For the most part, this has been achieved by selling exclusively online. However, many leading (and well-funded) brands have recently opened physical retail spaces, often in the form of pop-up stores, starting with prime locations in LA, NYC and London.
This strategy may feel counter-intuitive to the digitally native playbook but is driven by a number of factors. First off, the proliferation of new brands has made online customer acquisition more expensive and less effective. Secondly, and perhaps more importantly, offline interactions are always going to play a key part in the process of selling physical goods. That’s not to say new brands are not innovating on the brick-and-mortar front. They’ve created their own category of shops, with the playbook including insta-worthy decor, minimalist layouts and staff that make you feel part of a family. For a deep-dive on what makes this new set of retail spaces special, take a look at this post by Justine and Olivia Moore over at CRV.
So what does this have to do with shared spaces?
As brands place more importance on offline touchpoints, the time from launch to taking up retail space is shortening. Where Bonobos set up its first physical ‘Guideshops’ about six years after launching online, Away opened the doors to its first concept store within three years of launch. Younger, less-established brands want to make use of brick-and-mortar pop-ups earlier than ever.
As with beauty, the economics of renting your own space, temporary or otherwise, can be questionable. There’s also a lack of flexible facilities, tailored for the unique offline/online needs of new brands. Essentially what’s required is Appear Here with the office facilities of WeWork. The closest approximation to this I’ve seen so far is Re:store. Founded by Selene Cruz, Re:store is creating coworking spaces that come with carefully designed storefronts, fulfilment services, office space and a focus on community-building, the holy grail of today’s direct-to-consumer brands. Selene just scored funding from Sequoia and will be launching Re:store in SF early next year. I’ve no doubt it’ll fill up quickly and that we’ll see similar models pop up in other cities.
Gastronomy
So this is a tricky one. The industry shares some of the workforce dynamics I‘ve described in Beauty. As a chef or cook it’s likely you’ll work at someone else’s restaurant or have your own establishment, both of which have the usual pros and cons attached to them.
There are a few models that are reimaging the gastronomy infrastructure but they’re not geared towards individuals. Deliveroo has opened shared kitchens that are rented out to established restaurants, allowing them to cover more ground without opening their own location. Our portfolio company Taster is developing restaurant concepts that leverage the infrastructure created by delivery platforms such as UberEats and Deliveroo.
The complexities around food preparation and commercial kitchens may make it harder to create a viable shared space concept. That doesn’t mean it can’t be done. A quick google search revealed Mission Kitchen, a co-working space that is being developed specifically for food entrepreneurs. It offers different types of kitchen memberships, as well as a desk-only option. I look forward to seeing the first two London locations when they launch in 2019.
Endnote: My parents have been owners of a small business (first a restaurant, then a care home) for over 20 years and that’s one of the lenses through which I see this topic. I can’t imagine them ever trading the freedom of being self-employed for a steady salary but I’ve also witnessed the ups and downs of running an independent business while supporting a family. This post aimed to explore solutions that could take some of the risks out of the equation for people that don’t have the capital to run their own commercial space but need more than desks and conference rooms.
As ever, thanks for reading. If you have any thoughts or feedback, let me know at deepka@heartcore.com or on Twitter @deeeepka.
