….maybe not everyone will be happy with this blog post. I have had some friends tell me I should hold off on blogging….but this is how I get my mind “at ease”….
After scrambling to get Shenzhen’s official startup weekend going, we did have a pretty good success, and I thank Kawai, Nik, Rafael, Sammi, Bruce, and many others. Also to the owner of SZteam, Li Jun, for sponsoring the space.
But it burnt me out….and after the event, many many of my business colleagues and friends told me I have to stop being a charity and focus on my business! That this non-profit stuff is going to drag me down….
I have been strategically thinking about how to deal with all of this…at the same time there have been financial issues at SZteam.
I was amazed after coming back to China from USA to see the renovated SZteam after I thought we were under so much financial pressure. But I’m just the “marketing guy” and it seemed cool.
I enjoy networking, connecting – things moved really fast with the Shenzhen coworking space…..but I loved my experiences hong kong boot coworking and went along for the ride for the Shenzhen coworking space.
To make the story clear….
Below is the email I have been sending around privately to my mentors and close business associates…this is the story…as much as I don’t like some of the ways it went down – I at least want the full story out there:
Dear (insert business associate name),
I am really in need of mentoring….I’ll outline here the things that are going on…
SZteam coworking space and how it came to be – I love boot.hk, was witnessing the space (via some meetups in HK) get setup while I was traveling between Philippines and Shenzhen, would have been more involved if I was actively living/working in HK. Even before HK coworking, I loved the idea in USA of coworking and sharing ideas and growing together.
An online forum in Shenzhen I am moderating a section “online marketing” and in December 2010 they asked to have meetings. So I organized a Saturday meeting in Jan 2011 (used website mikesblog.com), got Kingdee (a large Chinese software company) to sponsor their conference room for the meeting, and over 50 people came with minimal planning. People wanted to volunteer to help organize it. We planned the second in Feb 2011 and 100 people came. March 50, April 50.
During that time of having meetings, I was looking to get a coworking space together and branded it SZteam in Feb 2011 to mention it during the Ecommerce meetings and see if there was interest. I started searching for offices, getting costs. Considering various setups.
During this time searching for office options, I found on a BBS and they had mentioned they had extra space in their current office and wanted to try a coworking space. So I contacted them (this was maybe March of this year), invited them to boot.hk in Hong Kong to meet Jon Buford and see the space there. They felt it was a bit run down, and not so nice. That in Shenzhen it would have to be nicer and newer. A week or so after the HK visit, in their office, we agreed that there would be a base cost (about 8,000rmb if I remember correctly) and then after that base cost was paid for, the profit would be split 3 ways. Once we all saved up the money and got enough members, we would move to a new space. And the dream was a cafe on the ground level and an office on the upper level….but we felt to start slowly, use the office they already had and had to pay for anyway, and then we can make bigger moves.
People started coming to their office. To be honest, I was a bit worried that I could be cheated sending people there, but anyway, it was a test. I blogged about it, tweeted about it, weibo, and put it on the SZteam.com coworking website that I was building as the official location.
BUT, after about 2 weeks, they told me management of the building didnt approve of this kind of office sharing, and they had to stop it for the time being. So we did (this is around late April / early May if I recall correctly). I was a little disappointed, but understand this is China and we can’t jeopardize their office and business for this coworking space.
Then, in mid June, I am talking to one of them (via skype, while working in boot.hk actually) , and they say they have GREAT NEWS that they found a new office and then video cam’d me in. That their lease was ending in their current location (I wasn’t made aware of that from the beginning…) And this new place was massive, about 258 sq meters in a new section of high tech park. They asked if I still wanted to cooperate….they said it would be a great location for SEO training and meetings I wanted to do. I had to think about it, they did seem really excited and thought I would be so happy about this.
This changed everything, what happened to the “start slow” and do the 3 way split, wouldn’t I be a 33% owner? But now, if someone else rented a new office, I was sure that I would not be able to be a 1/3 owner. I was a bit….upset to be honest, that they didn’t consult with me before renting this new space —> not for my approval, but at least my opinion. Discussing this over beers with a business friend I am convinced why not just “go for it” – that I can run the events and build the community, that is really being an owner on paper what matters anyway? I kind of wrestle with the idea in my mind…but then decide it is better than renting some small office and “hustling” from one office to another office to another office….
So I went back to the 2 guys of this office and said I would do it for 10% commission on sales and to be titled “cofounder” for recognition. That my role is to be the community builder and marketing guy. They consider it and seemed to quickly agree.
So, I am not on paper as an owner.
The office opened in July, and we had it furnished and wired up until about 3rd week of July. I wanted to launch it with an official party, and they agreed it made sense. I promoted it a lot, in the chinese and foreign community, it was a thursday night event. Tons of people came. But not many desk signups.
I later find out the investor (who I never met, I don’t believe) was expecting to break even on the rent in 2-3 months. I think he/she was angry that there weren’t many signups on the opening night. I think at that point I was told the rent was 30,000rmb (I know, stupid, I should have asked upfront) and then we calculated the desk costs to be high, with fixed desks higher than virtual offices.
But I thought the community may be able to “justify” the premium. I started holding Startup Tuesdays there to get buzz, marketing / eyeballs there from target market. The other 2 founders agreed to do this, and we started. First meeting the other 2 founders were on site and helping. Again more people in the community liked this meeting and wanted to take part, volunteer.
I then mentioned the startup weekend to the group and they loved the idea. They wanted it right away. We set it up for early Sept, a decent turnout for a short notice.
I had to get to the USA for 3 weeks (sept 23 to oct 12) and tried to build up backups for me while I was gone. Seemed the group slowed down.
I returned, fired up to do even more, met with many coworking spaces in USA and also got the official shenzhen.startupweekend.org on board to recognize Shenzhen. But I seemed to have to rebuild the group. But we had a great speaker just last week (Cyril from china accelerator) and had a great turnout of about 30 or 40 people – he really liked what was going on.
I’m getting tired, I have to agree with the other 2 founders, the meetings aren’t converting so many desk seats. They don’t seem to support the meetings anymore.
And this week, its getting re-negotiated that I get a base cost on each seat and have to mark it up to make money from. The rent is already really high (about XXXXXXX after utilities, i’m told) and location is not in ideal location. I’m trying my best to promote it with events and community building (like the event with you that we are discussing) but now the other 2 founders of SZteam want to separate the events from the space, and I am the member/owner of the events and not the space.
I also have had a few staff, I don’t have them working in the office (to separate my ecommerce business from the coworking, actually) but now am willing to move them there. I have that 1 SEO marketing intern here and I have him in the office, I asked them how much for a desk. They offered me a “discount” of 400rmb…but I was actually hoping it would be less and / or even free. And also I asked for Monday fullday of meeting room with my other ecommerce staff – which they asked for 500rmb/mo (4 days)
Its not even about the money, I have never received any commissions on any seats that have come to the office. Its more the recognition of the hard work I am doing, the traveling to USA coworking spaces, HK events, startup weekends, promoting this space everywhere, using a SZteam namecard at events….
Over the past few months I’m constantly being pushed by other companies to work with them and not go to SZteam anymore, but I was committed to SZteam. now I feel “pushed out” by the others, and am looking at alternatives on how to move forward.
Honestly, I don’t want to give up on the space, but I feel all the pressure on me to promote the space (I have not seen the other 2 founders bring many paying seats) and at the same time, will now have to take financial burden to move my operating company in the office to better work and support myself.
I hope this was not too long, writing it out helps me thinking outloud, normally I would blog this on blog.michaelmichelini.com but I think this should be private, not for me, but for the other 2 founders privacy.
So there, I blogged the real deal story…I kind of feel like a fool, but I feel better telling how it is.
This post is getting lots of emails and direct messages. Here are some comments that people sent me personally and said I can post anonymously:
SZTeam was supposed to be a business catering to lean startups, but it did not even have its own business plan, just “seat of the pants” decision making. Why such a fancy space for lean startups? With no coffee shops or restaurants nearby? A 1 minute back of the envelope calculation would have shown it would not work.
So, I am one of those who say: you are not running a charity. Focus on your businesses! And, occasionally, organize a meetup when you encounter someone who wants to speak, have it held in Cheers or Jordans for Nanshan, next time at Le Bistro for Futian. You can still be our favorite networker, but don’t need to spend so much time on it.