Hi all, John here. Welcome back to Urban Tech and our new time slot! On Tuesday, I sent out a special update on Urban Tech. We are officially an LLC, and I'm excited also to share the launch of Urban Tech consulting. Coming from the consulting world, I know how valuable expertise in policy, communications and media strategy can be. If you are looking for a little extra help in media strategy, messaging, policy analysis, content writing or the alike services — let's chat! You can book time with me through Calendly, reply to this email, or shoot me a note directly at john@urbantechnews.net.
I'd also like to share that the second Urban Tech Q&A guest will run next week. I spoke with Swiftlane CEO Saurabh Bajaj. Swiftlane makes a modern, touchless access control system for offices. They recently launched a new Health Check product for checking for COVID symptoms. In the conversation, we chatted about security, privacy, the future of the office and more.
Finally, please continue to share Urban Tech with people who are interested in cities and tech. It’s making a huge difference! You can also follow Urban Tech and me and on Twitter and LinkedIn.
Okay, let's dive in!
A Long Thing: The Future of the Office is Flexible
Coworking and office space company WeWork announced a new product this week: "With the office market in limbo, WeWork has launched a pay-as-you-go offering that allows users to drop in for as little as an hour (and $10).
A source familiar with WeWork’s new “On Demand” program said it’s being piloted for the next 60 days in New York City. As companies reopen for business, it reflects a growing demand for a “third place” to work — in other words, a flexible space that is neither home nor office."
No sector has seen more change and upheaval than commercial office space. It wasn't that long ago we were talking not only about WeWork being one of the most prominent startups in the world, but several unicorns like Convene, Knotel, and many other smaller companies that were essentially unbundling the commercial office lease. What I mean by that is traditional office leases were 5-10 year terms for tenants and often, after staffing, was the most significant expense for a company no matter the size. What a company like WeWork offered was the ability to plug into an infrastructure or network for as much space as needed on flexible terms.
For companies, particularly ones looking for venture capital, this gave them the ability to have a nice office with cool amenities on flexible terms and zero risk that they would outgrow the space. You can see in the below chart how fast it took off. WeWork did for startups what pickets and shovel sellers did for gold miners in California. They sold the tools the next frontier needed.
From my perspective, the WeWork IPO debacle and historic drop in valuation happened because of poor corporate governance, bad PR, fear of a coming recession, too much hype for innovation that didn't materialize, scaling too fast, and at the end of the day a misalignment in the operating model. That said, the concept of slicing up the commercial office lease is still attractive and a powerful thing. It's not going away.
Now that COVID has struck, more people are remote and teams are more distributed. Flexibility and the ability to get office space as you need and at a flexible rate will be paramount for the industry to rebound.
This model, having longer-term spaces surrounded by on-demand spaces, isn't new. Several companies, including Breather and IWG offer this. [Disclosure: I worked as a PR consultant for Breather in my previous job at Mission North.] This model isn't easy to execute. It's extremely operations intensive and with COVID, has only gotten harder.
Companies like Fetch Robotics and Nero are working on automated robots with disinfecting agents to make spaces clean. These certainly have strong commercial office applications. These solutions will be paramount for getting people back into the office on new schedules to spread workers out.
COVID isn't going to be the death of the office. It is a catalyst for reimagining offices and office life. I think the future of office life is a blend of working remotely and coming into the office a few times a week for key activities like brainstorms, client meetings, or an all-staff meeting.
What I'm Reading This Week
The New York Times: Facebook Bets Big on Future of N.Y.C., and Offices, With New Lease.
"Facebook on Monday agreed to lease all the office space in the mammoth 107-year-old James A. Farley Building in Midtown Manhattan, cementing New York City as a growing global technology hub and reaffirming a major corporation’s commitment to an office-centric urban culture despite the pandemic."
"With the 730,000-square-foot lease, Facebook has acquired more than 2.2 million square feet of office space in the city for thousands of employees in less than a year, all of it on Manhattan’s West Side between Pennsylvania Station and the Hudson River."
Facebook certainly doesn't expect the office structure to end despite the pandemic. The area in NYC where the building isis a growing Tech center with Google, Apple, and Amazon all having major centers nearby.
TechCrunch: What Q2 fundraising data tells us about the rest of 2020
Some good news: “VC interest has been at an all-time high over the last quarter. Interest rebounded over the course of a few weeks after the pandemic was declared and shelter-in-place orders were given. But once interest rebounded to pre-pandemic levels it did something surprising. It kept climbing. In fact, the top 10 weeks for VC interest this year were all in Q2. Overall, interest was up 21.6% QoQ and 26% YoY. This means we’re looking at VCs viewing more pitch decks than they have any time in the last two years.”
Some not so good news: “We would normally see an increase in founder activity starting in late summer, leading to peak VC interest in the fall. Founder activity has been up and down, and VC interest has been steadily rising, which tells us there’s still pent-up demand to deploy capital. We should also see many founders who delayed their fundraising efforts enter the marketplace in the next few months. If pandemic conditions worsen, we might also see founders who had decided to push their fundraising efforts to next year moving their timelines forward.”
The Verge: DoorDash launches online DashMart convenience stores to sell snacks and groceries
“DoorDash on Wednesday announced the launch of a chain of virtual convenience stores the company is calling DashMart, which will sell snacks, groceries, and other food-related products from partner restaurants. These stores don’t have brick-and-mortar locations. Instead, they exist solely on the DoorDash app, kind of like a ghost kitchen if it were a CVS or 7-Eleven instead.”
After you build the infrastructure delivery, why not get in on some of the business of servicing consumers?
Doordash is creating another revenue stream for itself while also providing it’s new service with every advantage to succeed. It’d be crazy not to launch a service like Dashmart with their infrastructure.
Los Angeles Times: California labor commissioner sues Uber, Lyft, alleging wage theft
“In its latest move to take gig economy companies to task, California is suing Uber and Lyft for alleged wage theft. The state says the companies have “willfully” misclassified drivers as independent contractors instead of employees, depriving them of basic worker protections and wages.”
“The lawsuits, brought by California Labor Commissioner Lilia García-Brower, seek to “stop the two companies from misclassifying their drivers and allow the Labor Commissioner to recover unpaid wages and other compensation that drivers are entitled to,” according to a post on the labor commissioner’s website Wednesday.”
I think it’s going to be increasingly harder for gig economy companies like Uber and Lyft to skirt labor laws. California cracking down on the companies is only the beginning. I have to imagine other left of center officials in other cities and states will also follow their lead.
The New York Times: [For Robots, It’s a Time to Shine (and Maybe Disinfect)
If there is a star of the pandemic other than Dr.Fauci, robots would be my choice. As I wrote about Fetch Robotics solutions for disinfection, other companies like Nero are getting in on the opportunity.
The New York Times explores these solutions and how they are being deployed to ameliorate fears of COVID.
TechCrunch: Unagi, the iPhone of scooters, now has a subscription service
“Unagi, the portable and design-forward electric scooter company that made a splash with celebs and pop stars, has launched a subscription service.”
“The service, called Unagi All-Access, will be offered in New York City and Los Angeles. The company said it plans to expand to additional markets as it gathers customer feedback and refines the service.”
“Customers will be able to choose from two plans. There will be a pay-as-you-go monthly plan that costs $39 per month and a discounted annual plan for $34 a month.”
This is great news for consumers who if interested in scooting a main form of transportation don’t need to invest hundreds of dollars upfront for a scooter.