Covo broke the mold when it comes to coworking. Launched by NextSpace co-founder and former COO Rebecca Brian Pan, her husband, Jason Pan, and her brother, Daniel Brian, the family business is four businesses in one. It’s a coworking space, a coffee bar, a beer and wine bar, and an event space. Covo also offers hourly coworking, which has proven to be successful, both financially and in building a strong, diverse community.
The vision for the first Covo space in San Francisco was grand, and it’s been realized in fine style. The 18,000 square foot space is at 98 percent occupancy. Now the Covo team has launched a second 40,000 square foot space in St. Louis and has plans to open in several more cities by the end of 2018.
I spoke with Pan and Covo’s Director of Coworking, Alex Anderson, who was the company’s first employee, about their ambitious vision for coworking, how they differentiate Covo in a growing shared workspace industry, and how opening Covo to the public has been a catalyst for driving membership and growing the community.
Cat Johnson: What inspired Covo? How did your vision for it come about?
Rebecca Brian Pan: One of the conversations my husband, Jason, and I had over the last year I was at NextSpace was that even though NextSpace provides unlimited, free, high-quality coffee, people leave all day long to go to [local coffee roaster] Verve, or to go to Starbucks. They spend money they don’t need to be spending. It was a behavior I saw in San Francisco and Santa Cruz.
We started to really dig into why that was. We wondered if there was a way to capture that revenue while offering an even higher level of amenity and experience to members. That was the kernel for Covo. Then we started thinking that if we’re going to have a coffee shop, I’ve always wanted to own a bar so let’s throw that in there too.
We didn’t know how to fundraise. We knew we couldn’t bootstrap it because it’s too big of a project, and we didn’t know how all the pieces would fit together exactly, or how to run a coffee shop or bar. But entrepreneurship is not a particularly rational pursuit and I’ve always been very good at executing once there is an idea.
Did you have someone to help guide the big picture or was it step-by-step?
RBP: It was step-by-step once we realized a skillset we needed. We could leverage our network to find what we needed. We had some great advisors and mentors, but it’s also uncharted territory. There’s nobody who’s done this before that we could learn from. We had a food and beverage consultant and a coffee consultant, but there were hundreds of people’s brainpower to get the space off the ground.
There are already a lot of coworking spaces in San Francisco. How do you differentiate Covo in such a crowded market?
RBP: We were pretty confident that being ground floor retail with the coffee shop and bar would significantly differentiate us and create that top of the funnel traffic. That’s exactly what happened.
At the GWA conference I heard a statistic from JLL (Jones Lang LaSalle) that 30 percent of all office space will be flex space by 2030. The data actually said there was a range from a minimum of 20 percent to a maximum of 60 percent.
We’re surrounded by coworking at this point. There’s a coworking space across the street, WeWork has a whole building around the corner. When I first started NextSpace in San Francisco, there were four spaces in the whole Bay Area and we took less space than what we thought was the right amount because we weren’t sure if the market was saturated.
The old stodgy guys were very against change and didn’t believe that coworking was a real thing. They used terms like trend and fad. Now, they’ve totally reversed their positions. The largest asset holders are all about coworking now. It’s really gratifying. I’ve been telling them this since 2009, but something finally clicked.
What has the response to Covo been?
RBP: We are at 98 percent occupancy. All of our offices are full and we’ve been doing tons of incredible events and different things to support members and bring new faces into the space. In St. Louis, we have an even bigger property that’s 40,000 square feet. It’s gorgeous—it’s an old bank with all those details. It’s really well set up for success, as well.
What was behind the vision to expand?
Alex Anderson: We opened our first space in San Francisco in August of 2016. That was a big deal just getting that space up and launched. The space is 18,000 square feet and the space in St. Louis, if you include the basement, is 40,000 square feet.
We had to prove the concept of running four businesses in one—a coffee shop, a bar, an event space and a coworking space. We had a lot of concept to prove and make sure it all works.
We’ve been blown away by how receptive the community is to Covo. By having public elements to our business, we were able to really grow the community in a way that, in my experience of running coworking spaces, I haven’t been able to. You generally meet the people that hear about you online, or the people who have done specific research or who have a specific need for office space, but you miss out on all of those people that might just be walking by and would have stopped to check the space out if you had something to offer them. Having a public coffee shop and bar has been a really cool new dimension added to coworking.
Why did the Covo team choose St. Louis for the second location?
AA: Our idea in the grand scheme is to be able to go from coast to coast. We are going to offer reciprocity so, if you’re a member of one space, you have access to another.
St. Louis was super attractive to us. From a real estate perspective, it’s very affordable—the cost per square footage is so much less here. Our lead investor purchased the building and is leasing it back to us over 25 years. That really changes the game. It’s now become affordable to us and we can afford to keep rates down.
When you’re offering something high quality at an affordable rate, you can attract a diverse range of people to the space, and that’s so essential to building community.
In the Bay Area, there’s so much education around coworking and everyone knows what it is. People go around and shop for their flavor of coworking. There’s a ton of room out here in the Midwest for growth for good coworking spaces. For a city of comparable size as St. Louis, say Denver or Austin, you’ll find 20-30 coworking spaces. Here, that number is more like 8-10 coworking spaces.
There’s a lot of room for growth and the market is not saturated. Here in St. Louis, we’ve been totally welcomed by the entrepreneurial community and the coworking world. The downtown area of St. Louis feels more like a neighborhood than a stereotypical metropolitan downtown. But a lot of people wish it had more of a larger city downtown feel. Some of the things we’re doing, and things other businesses are planning nearby, are really going to help strengthen the downtown community.
It’s a small town feel. You get to know everyone and people are approachable. People are willing to sit down and meet and hear about your business needs. No one’s too important to get in a room with you. It’s been very welcoming.
Building community is low-hanging fruit in places like San Francisco, where everyone has a budget for coworking and everyone is looking for a space. Most spaces have waiting lists. What we’re trying to do on a greater scale, being more mission driven and make positive change in the world, we can have much more of an impact in a place like St. Louis than we can in a place where we all agree and are all on the same page.
What are your plans for other cities?
RBP: Our plan is to get St. Louis up and running and humming along. While that’s happening, we’ll raise our next round of investment capital and then add two more locations by the end of 2018. We have a long list of target cities, but it will really depend on where we are in the market cycle and when we pull the trigger.
When you were looking at coworking software for Covo, what drew you to Satellite Deskworks?
AA: In coworking, member management software is an essential tool. It’s been tricky because coworking as an industry is pretty new, but the software component of it is newer. Where coworking has come along to be as mature as it is now, the software element has been lagging behind. A lot of times you’ll find that someone has taken a property management software and put a fresh coat of lipstick on it and maybe changed a couple of backend coding things to make it more coworking friendly.
A lot of the software does a good job of giving you a database of members, allowing you to set up a recurring billing, have their information and store their payments. But coworking is so much more than having people in offices and paying their bills every month.
Satellite Deskworks offers a simple product that is very effective at what it is setup to do. It’s not the prettiest software I’ve ever used, but it’s one of the more functional I’ve used. We’ve used it with little to no hiccup which, through the inception of a business and a launch, is a big deal.
I work with the Satellite Deskworks team and have a great relationship with them. We have transparent and open, streamlined communication. If we find an issue, we’ll talk through it together and come up with ways to solve it. Then they kick it over to the developers to see what they can come up with. That the team is agile and open to suggestions from folks running coworking spaces is huge. It’s confidence building.
Satellite Deskworks has the same, if not more reliable, functionality I found with a lot of the other software, but without the bells and whistles. It’s not flashy, it doesn’t over-promise anything, it does exactly what it says. That’s what is important. We were a skeleton team of four or five people working really hard to get this huge coworking space open.
Working with the Deskworks team was super-easy. After we did a demo, I knew it had everything we needed and they said that, as things develop, they’re willing to work with us more on things that complement our business.
Are there Satellite Deskworks features you particularly like or find really valuable?
AA: The quick reporting is nice and easy. Whenever we need to pull numbers, we can download a report in seconds. We share the Deskworks account with our bookkeepers and they rarely have any questions for us because it’s really straightforward and the information they need is just right there. It’s very intuitive and a lot of the features are self-explanatory.
How would you advise another space operator who’s considering going with Deskworks?
AA: I’d love to just say, do it. But to be transparent, it really depends on the needs of their space. What I can say is that Deskworks has been incredibly reliable and easy to work with. If you’ve ever worked with a beautiful software service that has great curb appeal but you have a hard time reaching customer support, or you feel like your’e not heard or appreciated as a customer, that can be a very frustrating experience.
What drew us in and what has kept us as Deskworks customers is the reliability and the trust they work to build with their clientele. I think there are things they can improve on, and they’re working on them. I always hear about new features coming out, and there’s an opportunity to make recommendations. I think they’re headed in a great direction.
RBP: Barbara Sprenger [Satellite Deskworks founder and CEO] is a good listener. She takes our feedback seriously and she’s a good person that we like working with.
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