As more and more jobs are moved out of the office and into the home, a new challenge is facing the economy: millions of people are sitting at home bored out of their minds. To face down the rising tide of bored full-time and part-time telecommuters, NextSpace has developed the new co-working space: an office where work-at-home employees can work productively, away from the distractions of the dirty dishes and sticky floors at home. And today NextSpace is announcing the close of its $625,000 round of angel funding.
So as NextSpace spreads its wings and flies, the obvious question is: what kind of market is out there for this? Are there really that many people out there who are so desperate to get out of their houses that they’re willing to pay to “go to work”?
“The market is huge,” NextSpace CEO Jeremy Neuner told me. Neuner, the former economic development manager of Santa Cruz, estimates that some 300-500 million people worldwide work from home. “People still need a place to work, and they still need to ‘go to work.’ The coffee shop and home office just don’t cut it from professional and creative point-of-view. By which Neuner is referring to the ability to bounce ideas off of co-workers, find someone who knows how to tackle a particular challenge, and so on.
So why will people choose to go to a NextSpace office over a coffee shop or a library? “Coffee shops are great cause they’re free… and there’s coffee, but it’s not a workplace. If you have to be on a conference call, it doesn’t work. If you have a place where you want to meet clients, can’t take them to the Starbucks. There’s a professionalism, creativity, and productivity aspect to it.”
The other part of it is what the company calls the “NextSpace effect,” a unique social side-effect that Neuner describes as a continuum. At one end of the continuum is the ability to hang out with people, bounce ideas off of others, and get new ideas from people you might not have otherwise spoken to, purely because you happen to be in the same space. Further on in the continuum is the ability to share leads and business development opportunities. For example, you might know someone who needs a marketing developer—and you happen to know one that you’ve been sharing a NextSpace office with.
And at the far end of the continuum is the rare but nonetheless impressive feat of an entire business and product developing out of a few people who happened to mingle at a NextSpace office. The example Neuner gave was that of Rally Up, a 9-person company founded by Sol Lipman, who developed the team exclusively from people he met at the Santa Cruz NextSpace office. Rally Up just sold to AOL for a rumored $10 million in August 2010.
NextSpace has offices in Santa Cruz, San Francisco, and Los Angeles, with a membership that is just shy of 400. Some 90% of the company’s revenue comes directly from membership sales, with membership packages ranging from $150 to $2500 a month, and Neuner said many members slide up and down the scale. Someone might start coming to a NextSpace office with a bare bones membership, start making money with his/her new company, start hiring more employees, move up to a higher package that allows for more office space, and so on.
But for the work-at-home employee of a large company, it doesn’t really make sense to pay $150 a month to rent a space to work in (you might as well go back to the office). For that, Neuner and the NextSpace Team (which also includes former Santa Cruz mayor Ryan Coonerty, and Caleb Baskin, a local attorney and business leader) are experimenting with enterprise memberships with small-to-medium sized businesses, day passes, and more. Neuner says that the company has not landed any deals yet with a large company, but he plans to focus on that for the second half of this year.
The company plans to use the funds from this round to help open a new location in Culver City, CA.