Coworking: “I’m Outta Here” by Jones, Sundsted and Bacigalupo

I’m Outta Here: How coworking is making the office obsolete by Drew Jones, Todd Sundstead and Tony Bacigalupo is a curious counter-cultural book about the emerging future-of-work movement called “coworking.” Ostensibly, the movement is about practical workday logistics for the new rootless worker, whether he/she is a virtual traditional employee or a free agent, looking for ways to avoid going nuts working alone at home. The movement is about building ‘Spaces’ like this one, CitizenSpace in San Francisco (Creative Commons picture, taken from their website):

Dig beyond this surface value proposition though,  and there is a very definite philosophy at work within the movement. A philosophy anchored by an uneasy mix of primary-colored, bubblgum communitarian values, economic bets, and ideas about the business of making a living and living a life. The philosophy has a lot of potential, but also some limiting self-perceptions which could end up being fatal flaws. Can it cross the chasm, and go from being a marginal counter-cultural trend to a mainstream model of work? At the moment, I would offer 3:1 odds against, barring some critical re-engineering of the movement’s DNA.

The Concept

Let’s say you work mostly from home, either for a portfolio of clients or a traditional employer. Perhaps you have side “Slash” gigs going on. Problem: you slowly go nuts with a light-weight social diet of conference calls, grainy Webcam conversations, instant messaging and the rare coffee-shop conversation. If  you are married and/or have kids or a pet, they are becoming your sole source of deeper social contact, and you realize you don’t quite like being a family guy/gal 24/7.  With mobility, most of our social capital has moved online, and the modern, existential-angst-ridden mass prisons of solitude (otherwise known as ‘cities‘), where we physically live, can no longer effortlessly sustain normal human communities. We aren’t quite at the bleak cyberpunk landscape of William Gibson’s Neuromancer yet, but we are barelling away towards that outcome.  Neo-urbanism undoubtedly has its dark side.

Coworking offers itself up as a solution, and with a wink-and-nudge, hints that it is the solution. The surface value proposition is obvious, and is what attracted me to the idea in the first place, since I currently work for a Big Bad Corporation from home and coffee shops.  Besides the book, I’ve been exploring the coworking wiki, blog and LinkedIn group and following the very active coworking email list for a few months.

At a broad level, the surface value proposition is a no-brainer. In some form, this is going to happen. Even introverts like me are driven crazy by solitary confiment at some point, and even extraverts at some point run out of the energy to keep pumping up a new social scene every year, as movement disrupts transient pools of social capital.

What form will win is not clear. Maybe Starbucks will start building extended communities around its frequent-drink card. Maybe Kinko’s will take a second stab and actually get it right. Maybe an executive suites industry major will pull a Starbucks on the current highly local scene. Or maybe, real-estate developers will once again start developing apartment properties with non-trivial cultural engineering in mind. Their challenge will be to replace their current low-interaction residential populations into high-interaction ones, reaping the benefits of lower churn. If they do, it will represent a return to a real-estate business model that was last seen in the fifties.

Or maybe coworking is the winning formula. Like I said, 3:1 odds against this model becoming the market leader, but at least it has first-mover momentum on its side. So let’s take a look.

The Book

The book is  well-crafted, and its physical design reflects the values of the movement. It is square (7.5″ x 7.5″), typeset entirely in a sans-serif font, and is structured in six sections, each containing a series of 1-page articles (you can’t call them “chapters”). Most of the pieces combine text on one page with a full-page photograph on the facing page (often from Flickr), which gives the book a deliberate and calculated home-made feel (and being published on-demand via Lulu.com reinforces that branding). The net effect is that of a mashup between a coffee-table book, brochure, and conversation starter.  The design, perhaps, was meant to suggest “underground” — you get the feeling, reading the book, that you are being initiated into something of a cool, hip insider subculture. Definitely a fresh experience for book lovers who enjoy the sensory elements of reading, and an enjoyable read overall.

The first section, What is Coworking? provides a thumbnail sketch of the movement and its values. The basics are simple: get together a group of interesting rootless workers (typically talented, individual-contributor information workers) who get along well together and enjoy each others’ company. Get the chemistry going with various “entry drug” organizational forms like meetups, jellies and Barcamps, and at some point, see if you can cobble together a more permanent space where individuals can rent access to basic workplace amenities like desks, printers, coffee and so forth. The emphasis though, is on the people and the microculture  of work they create, rather than the facilities. The space organizer is primarily selling (or offering as a non-profit contribution) a community experience, not facilities. Prices I’ve checked out seem to vary from a couple of hundred dollars a month for drop-in, unreserved access, and between five hundred to a thousand dollars a month for shared/dedicated desks and storage. This isn’t chump change,  especially if you are primarily buying community and culture rather than square footage. So the value proposition has to be a serious one.

If you emphasize quality of service and facilities, you get the simpler value proposition of the related but distinct business of executive suites. Arguably, modern coffee shops are also primarily in the executive suites industry, though the counter-chain “local” coffeeshops tend closer to the coworking experience than Starbucks (in the four months that I’ve been fully Starbucks-virtual, I’ve had only two strangers come up and talk to me; in all my life of dozen or so years of coffee-shop work, there have been maybe a dozen such instances. So far, I’ve never initiated contact myself, but am always happy to chat if approached).

The second section is a too-quick treatment of the history of the idea. The authors trace the basics of the idea back to the turn of the twentieth century, to artisan colonies and collectives such as the La Ruche artists collective founded in Paris in 1902 and the Writers’s Room that was founded in New York in 1978. But you actually need to go much further back to the trade guilds (both urban and rural) that pre-dated the corporation. In fact, historically, vertical integration or orchestrated Keiretsu forms of economic organization have been the exception. Guilds that consolidated specialized labor supply regionally, and participated in broker-mediated value chains to the market, have been the rule, not the exception. The communities that grew around them were closer to the coworking model than the corporate one.  I am sure the authors know this; that they choose to highlight relatively recent fine-arts oriented communities is highly suggestive: there is a definite effort to construct an origin myth that has artistic rather than mercantile roots. They also consciously avoid other forms of twentieth century precedent, like British clubs (which I’ll talk about in a bit), Freemason-type “lodge” cultures, and so forth. While these were oriented more towards leisure than work, they belong in the family tree.

The third and fourth sections, titled Who’s Coworking and Coworking Spaces are the most interesting parts of the book, containing quick biographies of significant leaders of the movement, and profiles of pioneering co-working spaces, mainly in the United States. Finally, sections five (Corporate Outworking) and six (Work/Life Revolution) return to the values/ideology part of the conversation.

The  “work culture” bit  is articulated in different ways in different parts of the book (and in different voices, since the book quotes a lot of thought leaders).  Most of the problems are with this part. A great many very different factors get lumped into a specific and narrow values-based “work culture” dogma. So while the book is excellent at providing glimpses of real people and the ambiance at many real coworking locations, it does shoot from the hip quite a bit in trying to frame the larger argument surrounding cultural values. It also indulges in a bit of strawman-attacking of “corporatism” and caricatures traditional organizational forms of work a little too freely. Even allowing for a ready-fire-aim blog-like model of discourse, the conversation is heading in a definite and unambiguous direction, where dissent is a matter of different flavors of bubblegum. The movement is unnecessarily painting itself into a bit of a corner.

Most of these problems (or “early stage discourse characteristics” if you prefer) are at the level of the broader movement, and are not specific to the book, so let’s talk about the movement for a bit. Let me close my remarks on the book with a “thumbs up.” A definite must-read for any student of the future of work.

Moving on.

The Movement

When I first stumbled across the coworking idea (and its starter-drug partners), I was quite interested. A lot of the ideas seemed to be very consistent with my own evolving philosophy of the history (example: my ‘Organization Man series’) and future (example: my ‘Cloudworker’ series) of work. But as I dug deeper, differences began to appear. The short version: I think there are many more directions the future of work could take than the movement would like to admit.

Don’t get me wrong: if I could find a cheap coworking space within walking/biking distance of where I live, I would jump in and try it out with no reservations. My skepticism has to do with the movement’s capacity for mainstream adoption. Despite the paeans to diversity you’ll hear online and in the book, the movement currently seems to be populated by very specific kinds of information workers, who are very alike in some critical ways. Some of it is simply the effects of initial conditions and path dependence. But other elements are due to the gate-keeping/self-selection effects of a culture that is taking root and getting articulated in overly restrictive ways.

Though I haven’t yet managed to visit an actual space (the one nearest to me is in Baltimore, a couple of hours away), online conversations suggest a mix between the startip incubator atmosphere and the co-op atmosphere (I lived in an independent co-op for a couple of years, in Ann Arbor). Like co-ops, which tend to organize communities around shared value-based living arrangements (the one I lived in was vegan) or ideas like cooperative buying/farming of organic produce, rather than work arrangements, coworking seems to have a non-profit soul, even if the overt business model for the space is a for-profit one. This despite the fact that many of the movement’s pioneers come from the uber-capitalist world of tech startups. To give you an idea of the culture, a conversation currently going on in the Google group is about an idea for retro television displays linking coworking spaces. The source of the idea: an exhibit at Burning Man. The movement also shares a lot of DNA with techno-artistic subcultures like SXSW. But it is more the exuberance of startup fever than the dyspeptic bleakness of cyberpunk. This is not the Neuromancer crowd.

The biggest barrier the movement will have to overcome, if it is to go mainstream, is its high cost structure.   The second big challenge is to outgrow its aura of neo-hippie/Burning Man naivete. The community projects that perception strongly, even though it doesn’t actually deserve it. Branding and positioning problems loom. While I am obviously no traditionalist, I cannot supress a constantly-active urge to poke fun at the earnestness of uber-left Grand Social Engineering (my favorite South Park episode is Die Hippie, Die in which Cartman rids the town of a Burning-Man-like hippie music festival). To go mainstream, the movement will need to build irony, self-satire, pragmatism and an element of cultural agnosticism into its brand, while continuing to make catalysis of microcultures of work  its differentiator.

Let’s discuss these two barriers.

Can Coworking Cross the Chasm?

Cultures, like businesses, must organize for growth according to their ambitions. If the pioneers of the coworking movement have modest ambitions (say, to become a part of the landscape of work at the same level of importance as independent coffeeshops), there is no need for debate. They will get there.

If, however, “coworking” intends to be a larger  umbrella for a more diverse set of microcultures of work, some genetic re-engineering will be necessary. In particular, as corporations race to rid themselves of capital intensive office space and develop ‘outworking’ exoskeletons, a big market for “workspace plus friendly work group” is going to emerge. Each of the other contenders for market leadership — Starbucks, Kinko’s, large managed apartment complexes, and the executive suites industry — brings specific advantages and disadvantages to this emerging market. To win, coworking will need to offer the best value for the money.

Before I offer my thoughts, let me attempt to pre-empt a very common sort of reaction to armchair critiques from the “bottom-up community” crowd, which is “don’t just talk, if you want to make these changes, join in and make them happen.” Except that I don’t need to. There are enough economic incentives in play that most people (myself included) are going to make decisions based on options created by others, and with or without the help of the coworking movement, more options are going to emerge.

The odds of coworking itself becoming the market leader, like I said, are 3:1 against. The biggest reason is unfortunately in the part of the conversation that the community seems to pay too little attention to: cost. That raises serious doubts even before we get to “culture” as the differentiating value proposition.

The Cost Structure of Coworking

Remember why the market is being created in the first place:  improvements in virtual work technology are allowing corporations to save money by being more flexible.  The costs to corporations are in three areas: corporate real estate (office space), relocation costs for new hires, and “churn” costs when people quit due to endemic labor force issues like the “two-body problem” (spouses unable to find work in the same city). The equation applies both to regular employees and free agents and consultants hired through corporate ecosystems (whether the entire world can go free-agent, or whether we are merely headed towards a new equilibrium between paycheck and free-agent employment, is a bigger question that I’ve written about before).

More broadly, the basic economic issue is utilization. We spend 1/3 of our time at work and 2/3 at home (roughly, not counting going out for leisure and chores). If every adult worker has both a workspace and a home space, the space utilization is at 33% for the former and 66% for the latter. Culture and community are secondary issues. Hard costs will always trump soft benefits without serious rigging of economic incentives, even if it happens at great cost to human well-being. The fundamental economic forces then, are driving towards higher utilization of square footage in a civic community.

Coworking, by focusing on the objective of establishing permanent ‘spaces’ that are neither homes, nor offices, leaves this equation mostly untouched. Yes, there are a few counter-examples, such as the book’s anecdote of Socialtext renting out its extra space for coworking during its growth phase, but by and large, the ambition seems to be the establishment of dedicated physical spaces.

Any model that bets on higher utilization is going to be more attractive than coworking. For the individual like me, the question is “does a workgroup culture add enough marginal value beyond Starbucks ($3 a day for 3 hours of low-intensity social contact, mostly with strangers, plus a coffee thrown in free),  for me to take on a significant monthly burden beyond my rent check?

What models might beat coworking on this very basic utilization question? Quite a few. Apartment complexes could develop shared spaces as coworking-like spaces for their residents. Many large corporations in an area could pool money to provide free shared work centers. Starbucks outlets offer the on-demand cloud-computing type solution, where I can pay-as-I-go very cheaply, because they drive up utilization by not attempting to form strong communities at all, and using in-and-out traffic to subsidize sit-and-hog-table-and-WiFi traffic. Heck, even a “workluck” model — potlucks for work — which rotate among different participants’ homes, would beat the cost structure of coworking.

And this without even tackling the second big cost, that of commuting. Starbucks enjoys a high penetration density, so my commute, especially in urban areas, is always free (a couple of walking blocks). Can coworking achieve that sort of penetration organically? I doubt it. Solutions based on residential real estate could solve the problem through repurposing low-coherence communities to form high-coherence subsets. Office real-estate based ones (executive suites as well as corporation specific) are less compelling competitors, but they too hit higher utilization than coworking by giving up community and culture.

The key advantage all these models is that they take advantage of the potential for higher utilization through a mix of on-demand access and aggregation of local demand. Both these levers are unavailable to coworking because it tries to have both a stable social group and a stable physical space.  Unfortunately, it is really hard to have both without driving up costs.  Only the most successful free agents will be able to justify the expense.

But let’s assume that culture can be enough of a value-add that people will pay the necessary extra premium (or through a mix of employer overhead reimbursement and tax breaks, it becomes affordable). Let us assume that none of the other players can offer community benefits cheaper than coworking. Does the “come here for the culture” argument hold up for coworking in particular?

Is Coworking Culture Worth $500 a month?

But for the sake of argument, let’s assume that 80% of the educated workforce has gone free-agent by 2020 (or is employed by enlightened corporations in enlightened tax-regimes), and moreover, is successful and able to pay $500 a month to rent a shared desk, a la vacation time-share, in a culturally attractive metro hub region. The question is: will the typical person pay for the benefit of being part of a relatively stable set of like-minded coworkers? There are two sorts of benefits: the economic-cultural benefits, and the psycho-social ones.

The economic-cultural benefits I am going to summarily dismiss: job leads and new freelance gigs will follow the weak-link effect, and you will rapidly exhaust the potential of your coworking buddies. The other big economic benefit of being able to generate enough chemistry to form a new startup or Hollywood-style short-term collaboration is also not a good argument. There are other networking mediums (including online ones) that serve that purpose more cheaply.

That leaves us with the psychosocial benefits. Now, these are rather like the benefits of exercise and controlling fat intake: you will realize the benefit over the long term, by being mentally healthier, but in the short term, you can always do without. Which means paying for coworking is like paying for health insurance or buying a gym membership. This actually provides pretty good calibration: we are willing to pay between $100 – $300 a month (a lot of it hidden) for these non-dollar-capital forms of investment. So I suspect if costs can get down to that range, people will likely “buy” a work culture to participate in as an investment in long-term psycho-social health. The barrier to truly break is $80/month for a full-time desk (since Starbucks, at $4 a latte for 20 workdays a month, works out to $80), at that point, mainstream adoption is a foregone conclusion.

Which leaves us with the second big problem with coworking: even if culture is worth buying, within the coworking movement, there is only one cuisine available in the buffet, the vaguely neo-hippie Burning Man kind (even if, like I said, the perception is unjustified). Not everybody wants to hang out with “cool” software developers, artists and graphic designers. We need a multi-cuisine menu of coworking microcultures that includes Joe-the-Plumber hangouts on the other end of the spectrum, and a lot of varieties in between. Throw in hard-drinking sales types, worldly-wise middle-manager (or “general contractor” in the free agent world) types, and so forth, and you have a lot of such populations to cater to.

To get there, coworking will have to abandon its unnecessarily restrictive set of  “artisan” values. Can it get there? I don’t know. But to add something constructive, let me paint a quick thumbnail sketch of the kind of broader work culture I would like to work in: a neo-British club culture.

Anybody Up for a Neo-English Club?

Along with various screw-ups, the British left one piece of culture behind in India that I really appreciated, growing up. This is the gentlemanly “club” culture, which in the hot tropics, quickly shed its formal attire, while retaining its other pleasant attributes. I grew up in the big paternalistic shadow of the Tata Steel company, which, among other things, sponsored a heavily-subsidized club (the United Club of Jamshedpur) for employees (picture taken from the Website).

It wouldn’t be an exaggeration to say I am entirely a product of this club. The classic British club is not the golf-centric country club of the United States. Instead, it focuses on more indoor, intellectual pursuits, ranging from libraries to bridge and billiards. Scotch, not beer (and certainly not Sangria) is the alcoholic beverage of choice.  There were other amenities of course: table tennis (not ping pong), swimming, tennis courts and even a rarely-used basketball court. There was also an outdoor movie theater which showed movies weekly, a kitchen serving meals at a restaurant as well as anytime snacks (including the must-have English tea sandwich), and a kids’ playground. I spent a huge proportion of my first eighteen years in this club, reading, hanging out with friends, swimming and playing table tennis. If I still lived in Jamshedpur, I’d probably attempt to work there with my laptop.

The London clubs of early twentieth century fiction, and the real ones around the world they were modeled after, were more about leisure than work, but clearly a lot of important business got done in clubs, just as a lot of important American and Japanese business gets done on the golf course. But the best thing about the club as an institution was that it was offered in a range of intimacy levels and cultural and political varieties. The Diogenes club frequented by Sherlock Holmes’ brother, Mycroft Holmes, forbade talking to others. Bertie Wooster’s Drones club in P. G. Wodehouse’s Jeeves and Wooster stories was based on non-stop horseplay and gambling among overgrown schoolboys. Even allowing for the exaggerations of classic British fiction, the club culture allowed every sort of culture to find a home, from ultra-conservative to liberal, and offered a high-variety cultural bargain that was worth the price. There was a club for every type (I have no idea whether the club culture is still alive and well in the UK; in India, it is becoming increasingly inaccessible due to cost). Of course, in its classic form, the club was also something of an expensive preserve of the parasitic leisure classes, while the working man stayed in his pub. But that doesn’t mean the club culture wasn’t a great invention.

Something like that, appropriately reconstructed for modern times, and organized more around work than play, is something I’d pay $300 a month for, without a second thought, even if I had to forgo other stuff. The tipping point, for me, would probably be a library that served cucumber sandwiches, and a community bulletin board that forbade Yoga and Reiki flyers.

There, I revealed my true colors. Unabashed anglophile, modulo some British Raj political opinions. If anybody wants to try and start an English-style coworking club in the Arlington, VA, area, I am listening. Seriously.