Inside A Growing Movement Of Coworking Spaces For Atypical Entrepreneurs

Long Beach, California-based WE Labs just opened its second coworking space in the historic Packard Building, a Spanish Baroque-styled car showroom from the 1920s. Behind it is an empty lot, next door is an auto body shop, down the street are swanky new apartments, and a block away is the light rail. It looks like a textbook gentrification setting, but WE Labs’s clients differ from what you’d expect at mainstream, big-city coworking spaces like those in the WeWork empire. They include a bookkeeper, a mental health services nonprofit, painters, and a roller derby-themed fashion designer. Monday to Saturday, 9 a.m. – 6p.m. access is $175 per month—on the low side for coworking space in the L.A. area.

“The thing that I’m most pleased by right now is the fact that we’re drawing in membership from the community here rather than so much attracting outside folks into the area,” says Robbie Brown, one of WE Labs‘ managing partners and boot-strapping investors. “It’s less threatening than walking into a coworking space and seeing a bunch of white guys in dress shirts, their faces in computers and typing away.” (Full disclosure: I rent space at WE Labs.)

Many Kinds Of Diversity

WE Labs is one of several new work spaces with public-service missions that include supporting low-income and minority entrepreneurs, artists, and social enterprises—nonprofits or for-profit companies that put social goals first. Some of these spaces, like maker-oriented Ponyride in Detroit, are nonprofits; several, like HQ Raleigh in North Carolina, and WE Labs, are for-profit social enterprises called Benefit Corporations (B Corps).

This nascent national trend has been locally focused. “I found that there were communities across this country that were struggling with the same kinds of questions of building their entrepreneurial ecosystems up and trying to figure out ways that they can make them be inclusive,” says HQ Raleigh
cofounder Christopher Gergen, “but they weren’t talking with one another.” He hadn’t heard of WE Labs, for instance, nor had Brown heard of HQ Raleigh. Gergen and others are starting to coordinate nationally with the Forward Cities Collaborative—an affiliation of organizations and activists in Detroit, Cleveland, New Orleans, and neighboring Durham, NC, that trade ideas on business development in low-income and minority neighborhoods.

“If you’re a WeWork—which is in major metro markets like New York and Chicago and San Francisco, Hong Kong, Berlin, et cetera—it has a very different mandate and a very different strategy for where it’s going to go,” says Gergen. Communities outside the major commercial centers may have different types of businesses, he says. Health care and food and beverage companies are big in the Southeast, for example. HQ Raleigh’s tenants include the venture arm of green household products company Seventh Generation, a coffee roaster, and plenty of tech startups.

Ponyride opened in the hip Corktown neighborhood of Detroit in 2011 as a maker space and light industrial facility, with small businesses, including a furniture maker, clothing manufacturers, and a screen printing studio. “I would say in the ecosystem of Detroit we’re in the middle of the road of taking someone who maybe started a business in their basement or their kitchen and are ready to expand,” says Amy Kaherl, director of programming. Kaherl is also a long-time tenant and director of Detroit Soup, which hosts dinners to raise money for creative projects pitched at the events.

Detroit Denim, for instance, joined in 2012 with one employee renting 400 square feet. Having grown to eight employees, it recently moved to a new location with 8,000 square feet. A nonprofit called “The Empowerment Plan” makes a coat from recycled materials that converts to a sleeping bag for homeless people; it mostly hires women from shelters, whom it helps get housing and further education. Ponyride’s building also has a desk-based coworking portion that includes a journalist, a health coach, and the Detroit Public Theater.

Even downtown Detroit’s coworking scene looks different from what you might see in New York City or London. Bamboo Detroit has roughly 100 members ranging from Asia Newson, the 13-year owner of a candle-making company called Super Business Girl, to people in their 60s. About 45% of members are African American, and 40% are women, says CEO Amanda Lewan. Many Bamboo tenants are usual suspects for coworking spaces—such as game, app, and web developers and marketing consultants. It also has gigabit Internet provider Rocket Fiber and real estate developers jumping on Detroit’s downtown boom.

Memberships start at just $99 per month for 24/7 access. Bamboo Detroit also offers several “open days” per month, when anyone can come in to work for free, as well as free events such as panel discussions and screenings of movies, often by local filmmakers or with a Detroit focus. The company turned a profit within about six months of opening, says Lewan. “We’re a for-profit company with a social mission, and our mission is to provide an affordable option and to build a diverse entrepreneurial community,” she says. Bamboo is incorporated as an L3C (low-profit limited liability company), a designation in Michigan and a few other states in the same spirit as B Corps, which are recognized in other states.

Diversity of membership is critical, says Christopher Gergen. “We certainly have our fair share of app developers and education technology companies and advertising platforms and consumer tech companies,” he says. His first social coworking venture, Bull City Forward, opened in Durham, NC, in 2009 and focused on social enterprises; it struggled financially and closed in 2013. “Because we took a relatively narrow-band approach, we had a relatively small market to support within our entrepreneurial community,” says Gergen. Bull City Forward wound up ceding the high-growth startup businesses to a newer coworking space, he says.

Gergen took those lessons to HQ Raleigh, which he cofounded in 2012. “It’s really driven by this idea of ‘how do we leave the world better than we found it,’ right?” he says. “And how do we also do it through a sustainable business model?” Its umbrella company, HQ Community, has two other locations and could expand to 12 throughout the Southeast in five years, says Gergen.

HQ Raleigh charges a steep $300 per month for 24/7 access—more than WeWork, at $220. “We work to subsidize through sponsorships and partnerships,” says Gergen. “This is a big priority for us going forward.” Ponyride breaks even with plans that start at $55/month for 24/7 desk access. Floor space for tenants like manufacturing companies is below market rate, but rises as they grow, says Kaherl. WE Labs is not profitable; Robbie Brown thinks it can be in less than a year.

A coworking space may not need an overt social mission to foster social good. WeWork provides a discount to nonprofit clients, which make up 6% to 7% of its member base, says VP of member engagement Erik Martin. That may not sound like a lot, but WeWork is the world’s largest coworking company, with locations in 28 cities and 12 countries. “We see examples all the time where a nonprofit or a small social venture, or even individual entrepreneurs start hanging out where they can get access to members in a certain field,” says Martin. Half of WeWork members collaborate, he says, in anything from chats by the water cooler to presentations and Q&A sessions on topics like applying for grants and using Google AdWords.

Beyond White Dudes

Socially focused coworking spaces generally share a mission to serve minority entrepreneurs. They often share something else: a lot of white people in leadership positions. For instance, HQ Raleigh’s four cofounders are all white, with just one woman.

The cultural diversity can be more nuanced, though. With cofounder Markus Manley’s passing, WE Labs lost its most visible African-American leader, but between his family and other investors, the venture is still majority African-American owned. Ponyride was founded by white restaurateur Phil Cooley and his wife Kate Bordine, although its board is evenly divided between African Americans and whites, women and men. Bamboo Detroit’s partners, Amanda Lewan and Mike Ferlito, are both white, but they cofounded it in 2013 along with two African-American men, David Anderson and Brian Davis.

Leadership diversity doesn’t trouble Ed Boyd, cofounder of Invictus Office Center in Durham, which he believes was the first coworking space in the country that’s majority-owned by African Americans like himself. “I don’t see a problem,” he says. “We just hope you hold yourselves accountable to what your mission is.” The Invictus mission is to support entrepreneurs other than white men—a response to many sobering statistics he says that the cofounders learned about exceptionally high failure rates for businesses started by women and minorities.

“Things are sort of slanted against the entrepreneur who doesn’t have the family and friends that can help them generate or raise capital on the front end,” says Boyd. The Invictus space grew out of business mentoring that he and some of his cofounders had been doing for about a decade. They raised nearly $1 million to start the center, which became profitable after six months. After considering five locations including Atlanta and Washington, D.C., his team chose Durham for what he calls a combination of dense minority population and “a high regard for entrepreneurship.”

“Our mission is not just to work with minority entrepreneurs,” says Boyd, but it’s also to ensure that this work is carried on.” That includes requiring successful members to locate a business in or hire staff from the minority neighborhoods or to donate money or technical support to other entrepreneurs. Boyd touts a success rate for their businesses of about 90%. They include a catering company, a marketing firm, event planners, and Geek Squad-like consumer tech support service. A tenant called Board Nation USA makes gear and sponsors events for surfing, snowboarding, and skateboarding.

Boyd and Gergen are friends and collaborators in the overall community coworking movement through associations like Forward Cities Collaborative; but Gergen is pretty frank about HQ’s cultural limitations. “We are not going into these underserved markets putting our own model in there,” he says. “Our HQ’s are located in these cool, hip new areas…typically in a more downtown hub.” The company does offer to help locals starting up coworking spaces outside the hip-cool hubs.

“What we want to try to do is foster locally owned, entrepreneurial coworking businesses that are much more reflective and representative of that community and help to support those efforts.” The homegrown aspect is important to WE Labs, too. “The original reason for WE Labs was to go into other communities and build a model that can be replicated,” says Brown. “That’s hard because…you have to go into those communities and find the Markus Manleys and Robbie Browns.”

Ed Boyd, for his part, is bullish about expanding. Invictus is already scouting a second location, either in North Carolina or in D.C., and it’s talking with partners as far away as Los Angeles. “We have a mission, and we’ll meet whatever strategic partners or partnerships that will serve our mission,” says Boyd. “And I don’t think ethnicity, your skin color, your gender orientation, or whatever—I don’t think that should factor in whether or not you can successfully carry out your mission.”

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