Co-work office space is in high demand as the ranks of freelance workers swell. Entrepreneurs David and Brett Diamond plan to franchise their concept, Venture X.
Company. Venture X Industry. Commercial real estate Trend. Co-work office space is popular with the growing number of freelance workers.
When David Diamond and his son, Brett Diamond, launched Venture X in fall 2012, no one had seen anything like it in Naples.
The entrepreneurs leased 7,000 square feet of empty space at the tony Mercato shopping center, home to Whole Foods, upscale boutiques and restaurants. They then sold monthly memberships to freelance workers who needed a desk and sought the social interaction that comes with the office culture.
The Diamonds recognized early the need to develop office space for the growing ranks of freelance workers. Venture X is a so-called “co-work” space, where people who have no business relationship rent desks together in a mostly open floor. Monthly memberships start at $40.
Today, 120 companies call Venture X home, each with one to seven employees. The concept has been so successful that the Diamonds have partnered with United Franchise Group of West Palm Beach to start selling franchises nationwide.
“Now we know the timing is right,” says David Diamond, CEO of Venture X. “We wanted to grow and scale very quickly.”
The idea is to populate other cities with Venture X offices so freelance workers can have a place to work if they travel. For example, a Naples membership would be valid in Austin, Texas.
The Diamonds say their vision is to have a Venture X in every major city. They're actively selling franchises at franchise shows around the country. “We want to make it as simple as possible,” says Brett Diamond, the chief operating officer.
The Diamonds considered growing their company using venture capital, but they found that the quickest way to replicate the idea was to go the franchise route. Besides, United Franchise Group already has expertise selling other business-to-business franchises.
Just like any franchise, there are costs to buy into Venture X. The franchise fee is $49,500 and the initial investment for furnishing a 10,000-square-foot space is $375,000. Then, there's a 6% annual royalty fee and 1% marketing fee.
The Diamonds decline to disclose financial information about the performance of Venture X in Naples, but they say they've been successful with 120 members in a 7,000-square-foot space. The typical floor plate of a modern office building is 10,000 square feet, which could generate more revenue.
United Franchise Group can help provide up to 75% financing for a franchisee, says Jared Stresen-Reuter, the firm's brand leader for Venture X. Stresen-Reuter, who stayed in touch with Brett Diamond since they were childhood friends, moved to Naples to help lead the expansion.
Venture X is looking for franchisees who have the wherewithal to support the business. These include people with prior entrepreneurial experience and building owners seeking to fill space.
The Diamonds will continue to own the Naples location and will help train franchisees. They have a right to develop other Venture X locations themselves but will split the sales of new locations with United Franchise Group, says Stresen-Reuter.
Already, the Diamonds met with as many as 300 prospective franchisees when they exhibited in February at the Franchise Expo South in Houston. They set up a booth that looked just like a co-work space, complete with desks and chairs, and David Diamond says most attendees recognized it as co-work space. “There was not much explaining,” he says.
Ultimately, the idea is to have Venture X locations all over the country so members can use them anywhere they go. Sales executives, freelancers and other professionals travel extensively and Venture X is more appealing than working at Starbucks and less costly than executive suites, they say.
The Diamonds aren't worried that there are now many competing co-work spaces in many cities. They say the millions of freelancers in the new gig economy will need lots more space than is currently available. Besides, they don't have to explain to anyone what co-work space is because it's well known. “Every major city could have a Venture X,” says David Diamond, who is also co-founder of DeAngelis Diamond Construction in Naples and an angel investor.
Out of bohemia
Popular in cities such as San Francisco, Austin, Texas, and New York City, co-work spaces began as bohemian gathering places for techies who often wrote code together. These informal workspaces initially had little structure, no rules and no staff.
By contrast, Venture X brings more order into the co-work space by providing services such as mail and making sure the place is clean, the bills are paid and there's staff to help tenants. Monthly memberships range from $40, which includes one day of workspace, to $265 for one of several available workstations any time. For $525 a month, members can rent the same workstation. Office rents start at $775 per month.
Venture X is careful to have a mix of tenants, including younger entrepreneurs and more seasoned professionals. In Naples, for example, only a quarter of the tenants are technology companies. There are attorneys, accountants and other professionals from a variety of industries. “We want a very diverse community,” Brett Diamond says. “We do like to curate the space.”
Venture X executives also are careful not to have competing businesses. For example, there's only one tax attorney in the Naples office. The mix of businesses promotes engagement among the tenants and using each other's services.
Venture X is open around the clock. That's critical for younger generations and freelancers who work any time. “They don't want to work 9-to-5,” Brett Diamond says.
Of course, the Diamonds had to make some adjustments along the way. For example, they initially envisioned most tenants would opt for the open space, so they only created four private offices. Then, they realized that professionals such as attorneys needed private offices, so they now have 13 small offices with glass windows.
One of the keys to a successful co-work space is the social interaction between tenants. “The community is the biggest selling point,” says Brett Diamond.
Fact is, freelancers get lonely working from home. Venture X provides shared space where they can discuss business ideas, chat in a comfortable lounge and meet new people.
That's why there's always some kind of event planned at Venture X. Brett Diamond says the events come in three flavors that usually take place in the evenings: business education, social and cultural.
For example, one night might feature a speaker on a business topic that's important for entrepreneurs. Another night might have a musician or a party. Another night might host a group of young professionals, a charity fundraiser and even a political panel. Some parties have been so popular that the Diamonds had to hire security for lines that stretched out the front door.
That's also one of the reasons Venture X in Naples is located at the Mercato shopping center. The franchised locations will also likely be in or close to other such mixed-used developments, the Diamonds say.
Mercato's restaurants and bars offer entertainment after work. “People want to share experiences in a place where they can socialize,” says Brett Diamond.