Tony Freeth has seen the evolution of the office space industry firsthand. Co-founder of Phoenix Broadband and creator of Medusa, a product that handles premises infrastructure, Freeth has played a pioneering role in bandwidth management and workspace wifi solutions since the late-1990s.
Recently, Medusa was acquired by global real estate technology company Yardi. Freeth, who was at the first Global Coworking Unconference Conference (GCUC) in Austin, Texas in 2012, has now taken the role of Director of Coworking Europe at Yardi. With two decades of experience, Freeth provides a unique and valuable perspective on the now-booming workspace industry.
I spoke with Freeth about the evolution of the industry, Yardi’s acquisition of Medusa, and how commercial real estate has now adopted coworking as an asset class. Here are the highlights of our conversation.
Cat Johnson: What’s your coworking story, Tony? How were you introduced to what was then a small movement?
Tony Freeth: In 2010, I was talking to someone at Steelcase who told me I needed to go to Coworking Europe. While there, I came across a bunch of people who had a very different idea of how people could work in a space, based on collaboration and community.
We tried to sell that message to our conventional customers for many years, and for a long time their response was, “No that’s not what we do. Everyone wants a door.” We told them when you put millennials behind doors, it’s like depriving a plant of light—they just wilt.
I met [GCUC producer] Liz Elam at Coworking Europe and she invited me to Austin for GCUC. It became clear that U.S. coworking seemed extremely vibrant and extremely well-organized.
I imagine your customers have a different perspective about shared workspace now.
We’ve carried on the trend of trying to persuade our customers to look at different models. We encourage them to look at how they can make coworking part of their mix and use it for developing their customer base. You don’t have to pin someone to a workstation—you can let them move around and have a much better work/life balance.
Our leading customers got it fairly quickly and started doing it, but some of the more traditional office models are still, to be honest, struggling with it, and often they don’t have suitable, or adaptable spaces.
We’ve found that it’s still very much city-center, or science, or startup communities. We do see good coworking in science parks where people come together to start businesses around biotech and things like that.
Medusa is now part of Yardi. What was behind that acquisition?
We had a partnership with Wun Systems, which was acquired by Yardi in 2017. Wun Systems is a leading developer of co-working software with their platform called Kube. Yardi acquired PBL (the company behind the Medusa platform) in April 2018, as another piece of the strategic puzzle to provide a fully connected end-to-end platform for flexible workspace management.
Under the Yardi umbrella, we have access to a much deeper pool of developers and technology to really drive the pace of innovation on a global basis for owners/operators and service providers of flexible workspace.
What is your role now with Yardi?
My role for Yardi will be to bring the concept of a single platform to the coworking and flexible workspace market in Europe, with the capability of a very large company. Yardi is bringing enterprise class practices and activity to coworking.
This will make it easier for investors. We see that the people who provide funding into coworking essentially are investors with a very simple view of the world. One of their requirements is confidence in what they’re investing into and great reporting coming back—they want to know how it’s working out.
I’ve been in many sectors in my life and, in the early phases, there’s lots and lots of people reinventing the same product again and again. Some products survive and some fall by the wayside. You can’t just keep reinventing the wheel over and over. It won’t meet the expectations of people who want to put tens of millions of dollars into coworking in the future.
Yardi’s full embrace of workspace management solutions says a lot about the industry and where this is all going.
There is a definition now of coworking as an asset class. It’s part of the mix of commercial real estate people who have a portfolio of property—some of it on a long lease, some of it on a short lease, and some of it is coworking as a now-definable asset class.
Yardi views coworking as part of the mix of asset classes. Their customers want them to provide a solution for all types of real estate use. They want to be able to service their customers. The key bit is that coworking has become core to the company’s offer.
One of the eye-opening things about being acquired by Yardi is to hear how advanced these conversations are amongst the people who own commercial real estate around the world.
For coworking, that’s good. You don’t have to justify coworking anymore. You can be as individual and community-focused as you want to be and you’ll get the customers if you have a great environment and community. The old days of having to answer what coworking is and why you’re doing it are rapidly disappearing.
Coworking can really add vibrancy to more traditional real estate properties.
If you have a building with 10 stories or 20 stories, it’s good to have a mix of offerings in that in that space. People understand the benefit of having coworking in a space—what it does for footfall, what it does for buzz, what it does for getting people moving. There are thousands of little benefits to having a coworking space and people understand that now.
For successful workspace operators, the time should be good. A decent amount of money for really good operators should be available. Most of the investors will be investing in people.
Things get really interesting when you think about proven coworking space operators being brought in to create culture and community in larger workspaces.
I’ve been in a lot of industries over the years. In the early stages, the early adopters have great ideas but they never have the tools they need. Everything’s hand-built and people get knocked back due to a mistake or just bad luck.
Slowly, as the industry comes together and the tools become available, that’s when you get the ability to actually develop the business that you’re in. You suddenly discover that you have leverage because you’re not worrying about how people can connect to wifi or what you do at the end of the month because that’s already taken care of. You’re actually developing really great ideas that are going to get people working in a different way, which is why you started it in the first place.
GCUC is coming to Europe for the first time. What are your thoughts on the first GCUC UK?
I’m really excited about GCUC UK. I think the more commercial side of GCUC will play well in the UK. I know a lot of the GCUC team and I’m really quite excited that the GCUC way of doing things is coming here. I think GCUC will build a loyal base within the UK—I think it will go from strength to strength. I think this first one will be successful and I think it will fit very well.
GCUC has always been a little bit more commercial than some of the other coworking events, and the UK is very commercially led—much more than, say, Europe. That’s not to denigrate where other people are coming from, but the UK is very much a commercial market.
The word “coworking” in the UK is still considered a large space with startups or independent people in it that doesn’t make much money. That’s very much the perception in the property space as to what the word means.
I know that in the U.S., coworking is basically shorthand for the whole flexible workspace industry. My sense is that, in the U.S., the division between the serviced office space and coworking are not as distinct as they are still in the UK.
What I see happening in the States is that the two models are moving to meet in the middle. A growing number of independent spaces are looking to established office rental spaces for best practices around business and infrastructure. On the other side, the office rental companies that have been around for decades are looking to community-focused coworking spaces to learn how to create culture and build community.
One of Yardi’s largest customers, The Office Group, uses coworking together with the serviced office space very successfully. They’re very talented people with very strong ideas about how to create their spaces. We have other customers like, Office Space in Town, who are creating a different feel and different design, and potentially different culture, in their spaces, as well. The leading practitioners have taken it on-board, but some of the more traditional serviced offices providers are still slightly siloed in the UK.
Thanks, Tony. What do you hope to see at GCUC UK?
I’m hoping we can have a good look at, and to continue to work to generate confidence in, the whole flexible workspace and coworking sector.