A conversation on mobile workers and the explosion of virtual offices with Laurent Dhollande, CEO of CloudVO, and Scott Chambers, COO of Pacific Workplaces. (Reposted from Executive Suite Success Magazine, September 2011)
Laurent Dhollande (LD): Virtual offices have been a growing business for several years, built on the strength of home-based entrepreneurs and virtual companies. What is really significant today is that corporate workers are joining in, as they leave their corporate offices in droves, thanks to mobile tools, social media, life-style choices, and their company’s desire to eliminate dedicated office space. I could not resist the business opportunity this mega-trend represents for CloudVO. We are building a service platform with our technology partners to support mobile workers seamlessly where ever they need to do work.
RR: Scott, are you replacing Laurent as CEO of Pacific Workplaces?
Scott Chambers (SC): We haven’t sorted out this quite yet but we really have a collegial approach, with a group of six Managing Partners including myself running Pacific Workplaces. That won’t change.
RR: What is the relationship between your two companies?
SC: We are proud to have incubated CloudVO in our walls but it is a distinct company that left the original womb. We are happy to be their partners in Northern California.
RR: What percentage of center revenue should come from virtual offices?
SC: As much as possible since it is typically the most profitable line of business in a center, given the small footprint and overhead necessary to support it. Last year, virtual offices represented 25% of Pacific Workplaces’ total revenue in our 13 locations, compared to only 10% five years ago. This portfolio-wide number hides bigger successes in several centers that have close to 200 active virtual office clients. We hope to reach 50% of revenue from the virtual side one day, with the help of dedicated partners like CloudVO.
LD: One interesting fact about Pacific Workplaces’ experience is that none of their properties are in landmark buildings. In fact, some of their most successful virtual office locations are in nice but no-thrill suburban office settings. This highlights an interesting change in the make-up of the virtual office business: it is now less about image and more about convenience, collaboration, and the social aspect of the impromptu conversations folks have with other professionals by the coffee machine, because -pardon my French- ”working alone sucks”.
SC: I should add that our conference room and hotdesk revenue is also growing rapidly and is not accounted for in our “virtual office” revenue category. Perhaps it should be since the users are increasingly the mobile workers Laurent is talking about.
RR: Let’s talk about mobile workers then. How do they differ from home-based entrepreneurs? What kind of amenities do they need?
SC: In some ways the corporate mobile workers are very similar to home-based entrepreneurs as they use the same mobile tools, go to the same gym, and go back and forth between working for a large company and freelancing. Interestingly, corporate workers are less sensitive to “prestige” and “image” and more sensitive to amenities, and quality of service. The good news is that the companies they work for are a lot less paranoid about security issues than they use to be. From a service level perspective, plenty of bandwidth, good coffee, friendly staff, and conference room HD TVs for slide shows, IP/HD Video Conferencing and other collaborative tools are more important than expensive lobbies or prestigious addresses.
LD: Scott nailed it. The adoption of social media and mobile tools by the individual has permeated through the corporate walls and has perverted the Enterprise from within. The artificial barriers placed by IT departments in the past that made it difficult for employees to do serious business outside of the safety of the corporate walls are collapsing as fast as the Berlin Wall did in 1989. Mark Greiner with Steelcase said it best at OBCAI in Miami last year: “People are voting with their feet”. They have overpowered the almighty IT department and corporate inertia.
RR: How can flexible office space operators attract these mobile workers to use their day offices and conference rooms?
LD: Make it easy for the corporations as well as the individuals. Corporations want a single access point to a ubiquitous network of OBC locations. We provide this to them via our CloudTouchdown subscription program. Corporate clients appreciate that we have vetted our local OBC partners. They want us to work as the single point of billing. Our Cloud Support Center is only one call away to help them and their mobile workers where ever they might be.
RR: But in the end individuals make the specific location choice, not corporate, right?
LD: Right, but the choice could be restricted to a pre-approved list of facilities that satisfy certain standards or with which the company has pre-arranged negotiated rates. Within that context, individuals need to find and book workplaces easily and instantaneously. That’s where our intimate partnership with LiquidSpace is essential. The LiquidSpace platform enables mobile workers to locate and book close-by rooms real time via their smart phone and authenticate themselves via their LiquidSpace “passport” at the reception desk a few minutes later.
SC: That’s exactly how it works. We have migrated all Pacific Workplaces’ locations to the LiquidSpace platform with great success. It is free for clients we recruit on our own and we only pay a transaction-based fee for clients they bring to us, which made the transition easy. The real time conference room reservation feature of the program, coupled with its geo-locator and social media dimension, got us excited about the app. We now can attract the attention of the out-of-state visitor who happens to be a few blocks away, needs a conference room, and needs it now. Typically not the most price-conscious customer and most likely not someone we would easily find on our own.
LD: SC is right on LiquidSpace. I recommend every operator checks it out at the Global Workspace Las Vegas conference. We believe so much in that platform that we are building a whole layer of reporting and support on it, which we will make available for free to all CloudVO partners.
RR: Will you charge OBCs that don’t list with CloudVO if they need help with LiquidSpace?
LD: We do have an exclusive relationship with LiquidSpace with respect to the industry, but if these operators are friendly like all the readers of your magazine, we might help them just the same.
RR: How important is social media in the virtual office context?
LD: Paramount! The new virtual office business is all about mobile workers and social media is a way of life for mobile workers. No one has as much depth in social media as we have in this industry, and we see this as a critical competitive advantage from which we want our partners to benefit. I am pleased to report that Twitter recently invited us to join a select group of certified companies to test out their new approaches to facilitate B2B and B2C on their platform. That experience is invaluable.
RR: It sounds like “Mobile” and “Virtual” with a dose of “Social” may be the next engine of growth for you. Thank you both for your insights.