Last month I had the honor of covering the TOA conference in Berlin Germany. At the conference I met up with Dan Zakai the co-founder and CEO of MINDSPACE and got to learn a little bit about his company as well as how he balances his family life along with a rapidly expanding international company.
MINDSPACE is an international co-working space provider with multiple locations including London, Berlin, Hamburg, Herzliya, Munich, Tel Aviv and coming this October to Warsaw, Poland. They will also be announcing a few more locations including the United States by the end of this year.
They just completed a $15 million initial round of financing a few months ago.
What differentiates you from other co-working spaces?
Dan: We have a strong attention to detail. We are kind of a boutique, upscale, co-working service/co-working provider. When you walk into our spaces, you see the difference in the design. These are fairly large areas, so we’re not doing small co-working spaces. The typical size would be anywhere between 30,000 to 50,000, 60,000 square foot.
Hundreds of members, in every location, give strong attention to detail in choosing our locations, the buildings, designing the spaces, choosing the teams, catering to customers…that’s MINDSPACE.
Would you say you’re primarily private office spaces?
Dan: Yes, primarily private office spaces for teams of any size. We even have companies who have up to 200 work stations with us.
So Barclays, the bank, operates from a MINDSPACE location in Tel Aviv. We also have Volkswagon in our German offices.
The co-working market is changing. We started three or four years ago targeting mainly start-ups and freelancers. But now, it’s basically a market for everybody.
Everybody who’s looking for an office (small, to midsize, to large enterprises) are looking to come into co-working spaces.
The fact that we have upscale, large sized, co-working spaces, allows us to cater to those companies as well.
Are the common amenities shared by the different companies, or do they each have their own?
Dan: Yes, common amenities are shared by the members. Those amenities are the lounges, meeting rooms and event spaces that we own.
In Tel Aviv, we also have a gym, rooftop, and showers etc. that all our members share.
So someone working for a startup would be sharing the lounge and having coffee with executives from Volkswagon?
Dan: Exactly. Even if a company has their own floor or their own space with their own meeting room, the common areas are all still shared.
I think that’s what creates a special community. Co-working used to be a place for startups and freelancers with a very specific type of community and joint activities. The fact that we have a broader audience allows us to have more diversification in the activities that we run.
“Co-working used to be a place for startups and freelancers with a very specific type of community and joint activities. The fact that we have a broader audience allows us to have more diversification in the activities that we run.”
We focus on lifestyle also! We don’t just focus on workshops and tech events on how to become a successful entrepreneur, we also do wine tastings and talks about art!
We’re trying to give a platform for a broad audience, which is, in a way, characterized, like you mentioned, the Millennials or people who are looking for that lifestyle, and then better living, and not just coming to an office and work with – a more interesting and creative environment.
Do each of your locations feature the same design theme or are does each feature its own unique design concept?
Dan: There are common grounds to all of our locations regarding the layout, but every location has its own unique vibe and soul.
When we came to Berlin, we decided to hang a lot of art on the walls. So, we chose local street artists from Berlin. We bought the furniture at the local flea markets.
So every space gets its own vibe and style. When you walk into MINDSPACE, you know it’s MINDPACE, yet every MINDSPACE location is sill unique and slightly different.
What inspired the name?
Dan: Space is our business and what we do. We don’t just provide a space to work, we provide so much more than that! It’s also not just about coming into an office and working.
I think all of us want to get more out of our lives and we want to do more. That’s the mind, that’s how we provide our members with an inspiring workspace, by providing them with a lot of other activities for them to do.
Basically, we take care of everything for you. On top of taking care of the office organization, we also want to help the companies have a certain culture.
We provide the DNA to the culture to the companies by the kind of events we host and providing all the content that it provides.
So it’s not just an office. We get a lot of CEOs coming to us saying, “Well, productivity’s higher because people are working more, and they like spending more time in the office.”
“They see other people working around them. It gives me a ‘push’ to be more successful and to work harder, but they’re also happier about coming into work because they get a lot of things that they didn’t get before, and we are not capable of providing them, so you do that for us.”
If you’re a young company, sometimes you’re focused on making it, that you don’t have time to take care of your employees. You don’t have time for those social activities or you don’t have the resources, even. That’s where we come in. We take care of all of that.
That’s great. As far as your business model goes – do you lease os purchase the properties or do you offer it as a service to the landlords?
Dan: We take on long-term leases on the properties. We do the build out based on our design and then we operate the space, but we don’t buy the property.
How did you get started with this?
Dan: Personally, I sold my previous company. It was a solar energy company, and I saw this cool concept of co-working and I thought to myself, “Well, I can do a good job at it.” It’s a combination of real estate and tech and design. It was kind of like coming into a market that you can actually disrupt and make a difference. All of that was the perfect combination for me.
I come from a family with some real estate background, and so the real estate side for me was straight forward. But bringing in all of that innovation, creativity, and soul into the project made it that much more interesting to me.
“I believe that the whole office market is going to change. Co-working, right now, is less than 1% of the total office real estate market. It’s about to grow much bigger than that, so there’s also a huge market opportunity.”
Everybody talks about co-working lately. I think we’re only seeing the very beginning of it. I believe that the whole office market is going to change. Co-working, right now, is less than 1% of the total office real estate market. It’s about to grow much bigger than that, so there’s also a huge market opportunity.
Do you see yourself entering into the co-living space at all?
Dan: Maybe in the future. We haven’t looked into it. We just had a talk with a company here that’s doing co-living.
What’s your take on retail? Do you think what you’re doing can be adapted into the retail spaces at all? Do you think retail is dead? What’s your perspective on that?
Dan: It’s interesting, a shopping mall is kind of like co-working for large companies. It’s already there, so there might be a twist to it. It might work, it may not. I’m not sure about it. The retail story is a big enigma at the moment. Not my territory, really.
As an entrepreneur, what would you say your biggest strength is?
Dan: My ability to change with the fast moving market, understanding it and executing quickly. It’s better to move with the market based on how you feel about it at that moment. I think that’s probably my strongest strength.
On the flip side of that, what would you say is your biggest weakness as an entrepreneur?
Dan: It’s a good question because if I tell you the full story, you’re going to tell me, “You’re pretty bold. You made some bold decisions,” but I think I can be bolder. I think that when you identify that you have an opportunity, you need to go for it and not think twice. Sometimes I think twice, sometimes I’m reluctant to take very bold decisions.
It’s really proportionate because most people probably think I’m crazy and I’m taking really bold decisions. For the first three years, it was self-funded. We didn’t raise any money at first, we only raised some at the end of the last year. We took some long-term commitments on the real estate that we’ve leased and all of that. Again, need to take that into proportion.
What’s the biggest lesson you’ve learned from a mistake?
Dan: Sometimes, things that work in one place don’t work in other places. You need to make those adjustments.
We started in Berlin a year-and-a-half ago, and it was booming right from the beginning! Then we had Hamburg, which is another German city but behaves completely different than Berlin.
We have a product that we don’t want to change too much. We make some adjustments, but we don’t want to change it because we don’t need to.
But in Hamburg, we had to make some adjustments. We came into the market feeling very confident that it was going to work the way it did in Berlin and Tel Aviv, but it didn’t.
What I’ve learned from that is that you need to be more aware of what’s going on in the markets that you plan on entering. You need to listen more to the local people, you need to understand the culture, and you need to start from that and then adjust accordingly. Don’t to force yourself into the market.
Again, relatively speaking, we were able to turn around pretty fast. It took us a few months to figure this out and now it’s a success in Hamburg.
What were some of the fundamental differences between the two marketplaces, specifically, that you had to change or tweak?
Dan: Berlin is really fast-paced. It’s similar to Tel Aviv, similar to New York. For example, people come in, they see what they like and they just buy it right then and there. We were able to fill up the space really quick.
In Hamburg, it took more time. It takes more time and effort to create the awareness to something that is new. Co-working in most places is still a new phenomenon, at least this type of co-working that we provide.
I think it’s the dynamics of the city, of the culture. We learned that we have to be more patient and not to be too pushy and aggressive in our expectations, and marketing, and sales effort.
Again, it’s about understanding how the culture works and how you market to people. You can’t just copy and paste.
What’s the biggest challenge your company’s facing right now?
Dan: The biggest challenge is the fast pace. We live in a world where companies want to scale.
You have a concept that you want to grow, and you want to grow it fast and globally. So, I think the execution is probably the biggest challenge as of right now; being able to open as many locations as possible while also maintaining the level product that we have today.
To do this, it’s about hiring the right people.
If I need to launch a MINDSPACE location but want other people to do it for us, then we need to hire a great management team and to be able to have the right culture and DNA for the company so that the things I’m talking about right now (how we operate and what we provide) are deeply rooted within our team members.
It’s difficult to control a team in Poland, and a team into the US, and a team in Germany, but that’s how we want to roll out, so that’s the biggest challenge…people, basically.
Is there any specific software that you use to be able to have a dashboard and track what’s going on in the performance in all your different locations.
Dan: Yes. Our industry is fairly new, so we developed some of the technologies ourselves. For some, we use third-party software, but we make adjustments to be able to provide us with the dashboards and controls over what’s going on within the company. Basically, we have to build it from scratch.
Do you see anything as an existential threat to your business?
Dan: I don’t think so. I think it’s just getting started. I think for ages offices have been the same. Many things have changed, but offices remained the same. I think the concept of taking long term leases, building out offices and managing the day-to-day offices is a thing of the past, and it’s going to go away.
Various types of shared co-working spaces are going to form. We are taking a specific niche that is very hot right now, and the awareness is strong. But, it’s going to tap into other niches, as well. I don’t that there’s a threat. I think that the threat is for companies to be able to do it right, so you need to actually know what you’re doing.
We spent the last four years building the right infrastructure and making the right decisions – how to plan a space, how to build it, how to operate it. It’s not an easy task. And it’s certainly not an easy business at all. It’s not like you build it, customers come, and you will make money. You need to know what you’re doing.
If there is a threat, it’s about execution, it’s not about the market.
What would you say is a personal habit of yours that contributes to your success?
Dan: I don’t get scared, or I don’t get too excited from tough situations, because when you run a business like MINDSPACE, then you take heavy real estate commitments. We have 70 people working at the company. By the end of the year, we’ll be over 100. We expect to have over 20 locations by the end of the year. It’s a pretty heavy business in terms of liabilities and in terms of operation.
“We have 70 people working at the company. By the end of the year, we’ll be over 100. We expect to have over 20 locations by the end of the year.”
We have challenges every day. Every day something new comes up, and to be able to deal with it and not be pushed by it or be scared by it is, I think, the biggest thing that I’m capable of doing – not get excited by everything that happens. You need to have thick skin to run this type of company.
How do you define happiness?
Dan: Happiness is to be able to do what you want to do.
For me, on the career side, it’s to be able to do what you love. For the past 10 years, I’ve been an entrepreneur and I still remember the feeling of working as an investment banker. Every morning that I wake up, I feel energized and I want to go to work. Sometimes I don’t want even want to have weekends or I don’t want to have the holidays! I just want to keep going to work.
On the other side, there’s nothing more that I’d like to do than spend time with my family and friends. I think if you have a career that you’re happy about and excited about, you also need to have that balance where you’re able to spend time with the people you love. I think that’s happiness.
What’s the trick to that? How do you strike that balance? Friday night, at a certain time, do you turn off the switch?
Dan: I turn off the switch. I work very hard and I travel a lot, but when I’m home I spend some time with my family until everybody goes to sleep, then I’m back to work! Sometimes until 3 AM in the morning.
You need to be able to make that switch because some people tend to forget and that also affects your career if you’re not able to. To be efficient, you have to take some time off, time to think about the business, but also time to spend with your family.