Joel Steinhaus On the First Daybase and the Evolution of Coworking
New company hopes to be a nimbler addition to the busy commercial real estate sector
One of the first things you notice is the Soul Cycle in the old bank building on the corner, a silent commentary about how times have changed.
A few doors down, at 1450 Washington Street, in the New Jersey waterfront town of Hoboken, the first daybase is getting ready to open its doors. It’s a new post-COVID-19 spin on working, trying to be the friendly neighborhood place where you can rent space by the hour when you feel like getting out of the house, but you also don’t feel like traipsing all the way to the office, or what traditionally was your office.
Daybase’s founders, led by CEO Joel Steinhaus, are hard at work getting the maiden 5,000-square-foot workspace ready for its debut during the week of Jan. 24. There will soon be two others — in Westfield, N.J., and Harrison, N.Y. All three will be in train towns where folks traditionally travel in and out of New York City every day. Membership options start at $50 a month, according to a Daybase spokesman, and customers can also book ad hoc, with private desks and rooms starting at around $10 an hour.
Even as the new normal keeps getting pushed back, some inquiring minds are trying to figure out what workers will want out of the world to come, where even those slow on the uptake have learned they don’t need to be in the office to be productive, offices are going to have to change, and coworking will too. Coworking spaces are going to need to be more local and closer to people’s homes. That’s what Daybase is trying to address.
The company is looking for locations in dense residential areas, and would prefer ground-floor spots in heavily trafficked areas and/or at the bases of residential buildings. Daybase also plans to franchise nationally, though it directly leased its first locations. The natal one in Hoboken is rented from Asana Partners (Steinhaus declined to provide the rent).
Steinhaus spent an hour in early January in that first Hoboken location explaining what Daybase is, how it’s going to work, and why it’s going to work.
This interview has been edited for clarity and length.
Commercial Observer: It seems like for more than a year we have been trying to transition from COVID to post-COVID. A lot of companies are putting off their return-to-work dates. What do you make of all that? What is the office going to look like, and what is the role of coworking going to be?
Joel Steinhaus: There’s not going to be a switch that’s flipped, and all of a sudden a new normal is going to be crystallized. It’s going to take three to five years for behaviors and norms and policies to evolve and to achieve some sense of normalcy and stability.
We’re going to have shifting goal posts, with respect to what companies are going to try to achieve with their return-to-office and policies. And so one thing is for certain: the power dynamic has shifted from the employer to the employee, in a way I don’t think we expected going into the pandemic.
There will be a premium on autonomy, which includes choice and flexibility. There are people who want to come back to an office part of the time, there are people who want to stay remote the whole time; there are people who will want to have access to different places for different kinds of work. What the pandemic did was serve the stark reality that we have a choice right now of either going into a hub office and commuting there, or working from home. And home was not built for work.
In traditional coworking, flexibility is based in large part on the ability to take dedicated space for a shorter term. The trade-off there is an off-the-shelf product as opposed to a customized product. What’s missing, and why we’re building Daybase, is a place that can be consumed completely on demand, down to the increment of the hour. And you can come and go as you please. And you only pay for what you use, and it’s conveniently located. With more spokes on a hub-and-spoke model, you have the opportunity to offer a network to everybody for whom it will be convenient.
I think folks learned early on in this pandemic how much the commute took out of them, by its absence. A lot of people were saying that there would be a hub-and-spoke model, and that larger companies were going to discover the wonder of having a satellite office. It seems that a couple of the more progressive coworking companies are trying to gear their offerings toward that. Is Daybase looking at that?
Looking at the future of work and the where of work, it’s going to require a different set of tools in the tool kit. What’s going to happen is you will have companies that will have the opportunity to rethink what a hub space looks like and what the function of that hub space is. You will probably be thinking less [money] for that hub space because you won’t want to pay for that space that lies fallow for X percentage of time,
What we’re really trying to do is fill out that ecosystem with the on-demand solution for times when, we like to say, the hub is too far and home is too close. And that doesn’t exist today.
Please give me the basic nuts and bolts of the space here in Hoboken that you’re opening.
We have plans to open three out of the gate. This will be the first of the three. This one is 5,000 square feet. That’s our sweet spot. It’s important to us that it is in ground-floor, street-level retail space, and that it’s integrated into a neighborhood.
We anticipate that on those days when you need to get out of the house and you want to get some work done, you will want to integrate your work into the rest of your life. That could include being close to childcare, it could include being close to fitness, it could include being close to food and beverage; it can include being close to grocery and other things you want to do, as part of your daily routine. All of a sudden, that time you got back relative to that commute you no longer have, you can take advantage of that time by getting a workout in the middle of the day, or having coffee with your neighbor, or taking your kids to school.
About half of the space is unassigned seating, lounge space. That is for the transition time. That is for casual work, cleaning out your inbox. That’s for having a quick cup of coffee with your neighbor. That’s for the Zoom call, or the debrief after the Zoom call. And that is all consumed based on a membership. Not dissimilar from a gym membership. That membership gives you unlimited access to any Daybase lounge in any Daybase location.
On LinkedIn, it says that Daybase is “a network of on-demand workspots that fit your life (and not the other way around).” What does that mean?
People need a third place, a true third place. To be able to get work done, they need it to be accessible on demand, convenient, intuitive. What that means in a post-COVID world is it has to be close to where they live. It has to be enterprise grade. It has to be what they would expect if they went into their hub office, relative to how it performs.
The St. Louis Fed came out with a study saying that some 30 million jobs can be done remotely.
I note that Hoboken, Westfield and Harrison are places where a substantial number of people commute into the city by train. Is that a deliberate strategy on your part?
It will likely be the case that most of our early locations are in places that are connected by mass transit to a central business district.
A salient point is, in Harrison and in Hoboken, we are on the ground floors of multifamily developments. In Westfield, we are on what can be considered the main retail street, but it’s not in a building that has any residential above it. So in Harrison and Hoboken, it is likely that we will be serving the residents upstairs. In Westfield, we will be serving the residents who live in and around that main retail center.
You guys used to work at WeWork (WE). What did you learn there?
The benefit of the time our team spent together at WeWork is really oriented around what we learned from customers, and working with some of the biggest companies across industries, on how to think about space — not as an afterthought based on a budgeting cycle that gives you a head count, therefore you need X-number of seats, but really think about space as a strategic lever, and how can that strategic lever drive engagement.
Another lesson is capitalization. Capitalizing this business through franchising as the main scaling mechanism will allow us to scale favorably, and in large part share both the risk and reward with our partners.
So if someone wants to open up a Daybase, say, in Detroit, what franchising means is that person agrees to do certain things the Daybase way.
Right, and we’re going to be, and can be, through franchising incredibly precious about the experience for the end user, and we are going to be really collaborative with our franchise partners on what the local demand actually is, what the local user actually wants, and what that local community actually needs.
So that is not monolithic. It won’t be the same approach in Hoboken as it will be in Westfield, for that matter. There will be some things that it will be incredibly important to have consistency on, that we’ve enumerated in our franchise documents.
And the franchising process was a really rigorous way for us to have to think through every user experience that’s important to us, because enumerating it now means we’re incredibly transparent with our future partners on what is expected of them and of us, and of the partnership.
Describe the space.
You walk in and you are immediately greeted by a concierge. We want the hospitality experience to be up front in everything, so if you are in a hurry and you want to get on your Zoom call, you can scan your QR code and go this way and get to work. But if you want to have an interaction with the cashiers, you want to know how the space works, you have some supplies you left at home, or you want something, this is a hospitality experience.
There are two ways to go here because there are two experiences. This way is the day lounge. This is your unassigned seating. Different pods, we would call them, for different kinds of things. But it’s really oriented around getting into the space, transitioning to work mode, coming back here if I can, grabbing a cup of coffee in the pantry. We’re not doing any food and beverage in the space, but there will be coffee.
As you were ramping up your operation, did you speak to corporate executives and real estate executives on what they wanted in a coworking space?
We spent a significant amount of time making sure what we were doing was what was going to be needed, as the pandemic starts to dissipate and eventually we get to some new post-COVID normal. We surveyed over 100 people, we talked to people in organizations who are heads of human resources, and real estate and business lines, so we really got a comprehensive view.
By and large, companies are in a moment of paralysis. And you can see that by virtue of remote policies that are shifting and changing, and return-to-office policies shifting and changing. They need to be responsive to the needs and demands of the talent as those needs and desires evolve.
We had a hypothesis early on that if the pandemic is going to last more than a couple of months, routines are going to be disrupted, and people are going to start demanding a change to the old routine of five days a week in the same office and the same commute. The feedback that we got from individuals in particular was, while working from home, I need a distraction; it was monotonous. When you think about the hierarchy of needs, these were at the base of the pyramid.
There is certainly an equity component here. This is not the same for everybody. Working from home is not the same experience for every person. Homes were not built for work, and every one is different. There are people who do Zoom calls from bathtubs. And some of the same people have a palatial home office.
It’s silly to believe that the outcomes from a work product point of view and an engagement point of view are going to be the same, because of the infrastructure.
The other important point here is we are not trying to replace you working from home when it works for you, or trying to replace going to the hub office for the things you need to go to the hub office for — whether it’s larger-format gatherings, whether it’s training, whether it’s culture building.
I’m curious, what was it like working at WeWork?
I think that WeWork was a pioneer in many respects, in looking at the way that the consumption of office had been traditionally conceived, which is a certain term for an amount of square feet. WeWork and others in the last decade started to reorient the world around the end user.
And to think about that end user as a customer — what you get is a place that is more efficient relative to the amount of space you actually need to consume. The flexibility that WeWork and other providers provided was at a premium and will be at a greater premium going forward. So flexibility is really important.
What we take with us is that same orientation around the end user. Post-COVID, we think the behaviors of the office worker are just going to be fundamentally different. We’re not going to an office five days a week the way we were, so, as a result, there’s going to be a need for a new kind of product or service.
In the post-COVID environment, I don’t know how many people are going to want to cohabit in an office with a stranger whose health history or vaccine status they don’t know. If somebody sneezes, it’s a much bigger thing than before.
Let’s start with the sensitivity around COVID going forward. The health and safety of our staff is going to be paramount to us, so we are going to do everything in our power to have a safe and healthy experience for everybody. What that means as far as policy is that we are going to follow local regulations.
It’s different conceptually today than it was in March of 2020. People, especially the vaccinated population, are going to go out to restaurants, to bars; people are trying to get back to some kind of normal life.
When you’re describing strangers next to each other — what kind of affinity are they going to have toward each other, what kind of trust are they going to have toward each other — what I have observed in coworking and other contexts is that allowing that community to develop organically means that the community itself is going to be more authentic, as opposed to imposing any kind of real cultural norms onto a group of members.
For our purposes, community is going to look different in Hoboken than it’s going to look in Harrison, or that it’s going to look in Westfield, or in any other geography across the country. We need to allow the local location, and the local franchisee to establish a more authentic level of community building.
On New Year’s Day 2024, how many locations do you expect to have?
I think we will have more than 10 but fewer than 50. They will be in a handful of new geographies, outside of the New York City tri-state area. That’s our goal, to go national.
I would say we are going to be focused on top markets from a remote worker standpoint. And we will be attuned to where the world is going. Some examples: L.A., San Francisco, D.C., Chicago, Miami, Boston, Philadelphia, Dallas, Houston, Denver, Seattle, Minneapolis. That’s from memory.
Then you see places like Florida and Texas, where you saw a great influx. If those are remote workers, those are great markets for us.