Working but Not at Work: The Future Workplace and Nexkey
On weekdays, my coworkers scour the neighborhood for new coffee spots for the 3pm pick-me-up. This time, they found a cool one: Rapha is a bike shop that is also a coffee shop. Surrounded by walls of biking gear, the center island in the store sells coffee from an expensive-looking espresso machine and pastries, next to it a communal table with chairs as well as a couple smaller tables for a more intimate setting. It’s not a shop, it’s a “Clubhouse,” the barista-cashier quips.
Parting with $200 for an annual membership will get you free coffee for a year, which is incentive enough for my partner Kevin, who now strives to hold all his coffee meetings there. Kyle, who’s actually a biking enthusiast, uses it for its intended purpose — being able to rent high-end bikes cheaply. It’s a cool place to hang out and work for a few hours if you’re into biking or if you’re just a young professional.
Rapha is a trailblazer of a growing trend. Physical spaces are rethinking what they do and what they offer. Many shops today are still trying to turn over customers as quickly as possible by not offering ample seating, WiFi, wall outlets for charging, or even bathrooms. Others are recognizing the opportunity: tired of traditional offices, people want more flexibility and variety in the spaces in which they work and socialize.
After all, what activity do we spend more time doing during the week than work?
The coworking explosion
For proof of this trend, look no further than coworking, which has been exploding in the last few years. Deskmag projects ~19,000 coworking spaces supporting more than 1.7 million numbers by the end of 2018, which is 2–3 times of the ~9,000 coworking spaces and 545,000 members in just 2015. WeWork was only founded in 2010 and it is already Manhattan’s largest tenant, managing 5.3 million square feet of office space.
You probably think that coworking is all about the gig economy and early-stage startups, that millennials are renting desks or cozy private offices because they are lured by the foosball tables and beer on tap. But it is about a lot more than that.
It is about corporates wanting the flexibility of having both long-term real estate as well as a short-term low-barrier-to-entry workspace that they do not even need to manage. It is about shifting from CapEx to OpEx and being able to scale up or down easily, as well as cutting costs as office rents continue to rise. Coworking enables corporates to have a real estate strategy that can adapt quickly as their business needs change.
It is also about millennial workers who prefer workspaces that have better amenities and services and a more relaxed environment. They want the flexibility of going to work at more convenient locations than the usual corporate campuses in the suburbs, as they tend to live in cities and loathe long commutes. Working remotely could be terribly lonely and they prefer the social interactions and community aspects of coworking.
The rise of multifunctional spaces
Traditional storefronts are catching on and it is not just Rapha.
Down the street, Capital One opened a cafe in order to appeal to millennials in a different way. It offers Peet’s Coffee, free WiFi, device charging stations, and comfy seating to encourage extended stays. It is a radical departure from the typical bank parlors, with no-nonsense security guards flanking the entrance, where people line up to cash checks or get squirreled away to a cubicle for more complicated matters. The only signs of the bank that is operating this space are product promotions that bedeck the walls as well as a room where you can get free coaching on your money problems.
But, none is more creative than Metro Cafe, which is a stone’s throw away from our office. It is a coffee shop, a coworking space, and… a church! The pastor was inspired by a vision that his church should bring people together over coffee and foster collaboration, quite literally. To make it even more unusual, there are no listed prices and you pay what you want for the coffee, including nothing.
While Downtown Santa Monica is demonstrably a hotbed of innovation (and I would be remiss if I did not add: #LongLA), this trend is also popping up in other major metros.
Spacious turns restaurants into coworking spaces during the day when they would otherwise be closed. Recently they have also begun expanding into vacated retail spaces. Staples partnered with Workbar to launch coworking spaces inside Staples stores throughout Massachusetts. They have the whole nine yards — even nursing rooms.
The reality is, work is no longer confined to the office. We want to be able to work from anywhere and operators of physical spaces are capitalizing on the opportunity.
The hidden problem: access control
What very few talk about is how hard it is to innovate what you do with space, for instance, if you were to operate a coworking space. There is a lot of friction that the traditional real estate model and the services around it are not set up for.
For one, access and security seem to be diametrically opposed. Your coworking space has a rotating cast of members and their guests. While you want to make it easy for your customers to sign up for your service and come and go, you also want to make sure that only those supposed to be there are in your space without placing an undue burden on your customers or your staff.
You probably also offer a variety of packages in order to entice members with different needs: a desk or a private office, daily or only a certain number of days each month, full days or a set of hours split across different days. If your coworking space is doing well, you may want to expand locations and allow your members to float between desks and meeting spaces across locations. Then what if a member does not pay? It is not straightforward to link one’s access to their billing status. Being customer-centric unfortunately often leads to either administrative hassle or lost revenues.
Our portfolio company, Nexkey, has a solution for access control for the modern workplace. Nexkey can make any lock into a smart lock that you can open with your smartphone. They retrofit any mechanical locks and fob- or card-enabled locks as well as add locks to sliding doors, which allows workplaces to manage access to all their doors digitally. They have an API where you can embed Nexkey into your apps for your members, enabling a smooth billing-and-access process.
Nexkey recently came out of stealth and is unveiling their products with deployments at various coworking spaces, innovation centers, tech startups, agencies, office spaces, and even a gym. We co-led the Seed round with K9 Ventures and I am a board member. In fact, K9 has been the incubating grounds for Nexkey’s access control solution, read about Manu Kumar’s take here.
OnePieceWork, one of Nexkey’s customers, only has two staff members at each location who used to spend most of their days letting people in and out. With Nexkey, access control is now integrated into their membership app and is on auto-pilot. Plus, as it is now a lot easier to enforce usage of the meeting rooms to just those who pay, they are seeing an increase in revenues.
There are security benefits as well. The operations manager can revoke access instantly, without having to wait for your former customers or visitors to return their keys. While keys or key cards can be shared, a standard Nexkey user cannot share his or her digital key. By definitively knowing who has access to their space, Nexkey gives the owners a peace of mind.
The future workplace
In a world where Amazon can deliver anything to you with a few taps on your phone, we tend to think that people do not go out anymore. But people do; they are just looking for different experiences. Soon, spaces that only have a single purpose will begin to seem transactional and utilitarian. We will instead talk about and spend more of our time in as well as dollars at spaces that are multipurpose and multidimensional. Spaces that embrace their clientele and build a community have more reasons to draw in customers, build emotional connections, and an enduring brand.
The world is becoming more fluid and people want to be able to seamlessly move between different spaces. As real estate innovates, we will need to rethink the operational model so that it becomes more user-friendly and intelligent.
The future workplace is poised for change and Nexkey is opening the door.
