What lead you to the Nextspace Acquisition?
We have had a close and friendly relationship with the Nextspace founders and executives for almost a decade and always thought the world about what they have accomplished. We even had a casual conversation around a possible merger along the way. When they approached us about an acquisition a few months ago we jumped on the opportunity. Nextspace is a legendary name in the industry. People come from around the world to visit Nextspace Santa Cruz or Nextspace Berkeley, to see how effective coworking is done. There is a good reason for that: Nextspace innovated a unique style of active curation of coworking communities, where coworkers help each other be successful in their respective enterprise. It is the “Nextspace effect." A beautiful thing! Something we will cherish. Continuing to build on this success was a big draw.
How will Pacific Workplaces benefit from it?
Like most shared office space operators, we try hard to always support and strengthen our communities, but no one has done it as well as Nextspace. We believe the rest of the Pacific Workplaces organization will benefit from the energy, creativity, and community curation best practices that have been developed so well at Nextspace. We are embracing Nextspace’s entire history.
How will the Nextspace locations you are taking over benefit from Pac? Will you “Pacific-ize” Nextspace?
By all means no! We will care a great deal about not changing the Nextspace local identities. For example, the local branding will be Nextspace, Powered by Pacific Workplaces. The choice of font size is not innocent here. We acquired the brand for a reason.
The main value that Pac will bring to the Nextspace locations is in the back-end. We’ll probably bring more discipline in the form of business processes, more support and training to community coordinators, improved amenities, and running the spaces more efficiently with our technology platform. We will also expand the services provided locally such as Virtual Offices and expanded meeting room inventory which should add significant revenue to the operations, without affecting the character of the community. We have also developed strong marketing capabilities over the years and will apply those best practices to the NextSpace locations. A healthy coworking community is one that grows and one that is financially successful. We’ll make sure of that.
What did the Nextspace members think of the acquisition? Was the transition hard to manage?
It is clear that at first, some members were suspicious. For example, I was told that a member said to one of our community managers “Pacific Workplaces? That sounds really boring… I hope they won’t take away our Friday happy hours." Also, the Santa Cruz community, although located less than 1 hour away from the San Francisco Bay Area, likes to affirm its separate identity, sort of having “one foot in the Bay Area and two feet out”. The whole city was very proud of Nextspace, a local success, and we clearly felt some nostalgia, seeing it acquired by someone from outside of town.
So we decided to show up in force at multiple events with local members. We have had some extremely well-attended happy hours on the theme of “come meet the Pac” (Pac stands for Pacific Workplaces). Early suspicions quickly drown in the libations. No longer an issue!
Did anything surprise you so far with Nextspace? Anything you will change?
The low percentage of revenue from virtual office and meeting rooms. Nextspace efforts, in that respect, were embryonic and we will expand them significantly. Let’s be honest, if Nextspace had been thriving financially, they would not have approached us. What was missing the most in their operation was a focus on virtual office and meeting rooms. That surprised us because it is a low hanging fruit. One of our first initiatives is to improve the quality and the quantity of meeting rooms and day offices and list them with our channel partners CloudVO, Liquidspace, and DaVinci. We will also make the Nextspace affiliation with the CloudTouchdown network (600+ worldwide) prominent in the marketing collateral so that members know they have access to a solid global network. Virtual Offices is the engine of financial prosperity which in turn can fuel a prosperous coworking community. That will be a key ingredient in our recipe for financial success of the Nextspace communities like it is for Pacific Workplaces communities.
What is your perspective on virtual office members impacting a strong coworking community?
Visitors that book a meeting room may come to the space for convenience, but we don't see how they would affect a strong community in any negative way. Either they only come in for their meeting and leave immediately after, and in doing so help us leverage a small portion of the infrastructure with a very profitable activity, or they take interest in an event that might be going on and stay past their booking time, in which case they become hot prospects for full-time membership.
In your experience, how do you balance the trade-off of providing meeting rooms to members while monetizing them through external bookings?
One of the first things that struck us when analyzing the Nextspace amenities is how few meeting rooms they had (two per locations typically) and how little they were used. By adding more meeting room and day office capacity, and by marketing them more actively, we can increase the utilization of each room, while actually providing more opportunities for bookings by members. For example, a set of 4 rooms occupied 65% of the time presents more opportunity for bookings at any time then 2 rooms at a 50% utilization rate.