More coworking models: from high end to zero down

I interview a lot of folks about their coworking spaces and I always ask for a description of the business model. Is the focus on profit or not? What are rates like? This past week, I came across two very opposite-ends-of-the-spectrum models, financially speaking. Monolab|Incubator is in Palo Alto, California, and charges premium rates. Big In Japan is in Dallas, Texas, and offers free space to coworkers, who must go through an application process to earn a spot.

I interviewed Ismael Chang Ghalimi, Chairman of Monolab, and CEO of Intalio to find out more about his plans for spaces around the world, which I first read about in this IT|Redux article.

Then I talked to Alexander Muse, Big In Japan’s CEO.

Monolab offers an all-inclusive package for members that start at $1500 per month. The company hopes to open spaces around the world, perhaps even offering places for coworkers to sleep when they’re on the go.

Ismael explains how he came up with his plan: “We simply looked at the market for shared office spaces. On the less expensive side, we found very cool coworking facilities such as Bureaux in Sydney, Australia, or WorkSpace in Vancouver, BC, but they’re optimized for solo entrepreneurs or part-time visitors. On the more expensive side, we were quite familiar with Regus, and did not like the small private offices and the lack of networking opportunities with local members. We wanted to build something that would be appealing to global companies, large and small, with a strong sense of cosmopolitan aesthetics, very close to what Monocle (the magazine) is developing. We accidentally found the perfect place for a demo facility in Palo Alto a couple of months ago, and the whole project came together very fast after that.”

Currently, they have one location open, which features twenty workstations which they anticipate selling out by the end of the summer (they’re halfway to the goal). The expansion is targeted at eight other locations around the globe including San Francisco, New York, Vancouver, London, Sydney, Tokyo, Shanghai, and Singapore, with San Francisco expected to open before the end of the year, and Vancouver early in 2009.

Given the services provided, Ismael considers low cost. “We charge them enough to cover our mortgage and overhead. We do not have any full-time staff on site. We do not need to make much of a profit for the business services component of the venture, and can therefore keep our prices low.”

Though he’s the chairman of Monolab, his wife runs the operation, as he’s often busy globetrotting keeping up with 50 employees and 400 customers in 45 countries. This, in fact, is what inspired him to start Monolab. He’s convinced coworking is the way work will be done in the future for any number of reasons, two big ones being that “working from home is a bad idea and sharing resources is a good idea.”

He’s also hoping to partner with other coworking facilities around the world. “Our concept is fairly high-end and all-inclusive, hence a bit too expensive for solo entrepreneurs who are bootstrapping their venture,” he says. “Whenever we come across such prospects, we’d like to forward them to a local co-working facility we trust. In return, these co-working facilities might want to work with us for accommodating the needs of larger teams, or customers requiring slightly more sophisticated equipment and services.”

Meanwhile, right up the road in Dallas, Alex Muse’s jump into coworking was born of two things. First, he met Tara Hunt and Chris Messina, dug what they were doing, and hosted the third BarCamp at Big In Japan. “I thought coworking was a way to have the BarCamp feeling all the time,” he says. “I kept trying to be a catalyst to get someone else in Dallas to do it but no one stepped up — it’s a lot of work.”

Then, a second factor prompted an opportunity for him to take on the project. His company is housed in a 1.4 million square foot building that, for a long time, was only 20% populated by humans. The rest of the space was a data center. Then the building was bought and 100% leased. That left Muse with a lease-it-or-lose-it option on a 5,000 square foot space adjacent to his office. Not needing it at the moment, but knowing his company might grow into it, Muse went for the lease. “I said I’ll rent it. Then I said, What should I do with it?”

He decided to open a coworking space, hoping to attract UI folks, designers and “anybody with a cool startup.” Initially he planned to charge a nominal rent fee but the building management wasn’t keen on subletting. “So I said I’ll just do it for free. It’s not completely altruistic — I need to keep this space. If I can create good energy around my projects, great.”

But he didn’t want just anybody to pop by. So he came up with a scholarship application program to keep from being rude. Now he’s got a few little companies using the space and they’ve got a bit of a democracy going on. When a new applicant applies for space, they all get a say in part because Muse says, “I don’t want to be that guy who says no. I want to be the good guy.”

What if he winds up needing the space? He won’t necessarily kick the coworkers out.  “It’s an experiment,” he says. “If it works out, we’ll keep going.”