Airbnb and Uber have been pretty successful so far, providing solid experiences for users and suppliers. But the idea of reclaiming unused space, like livery cars and spare bedrooms, and reselling it to other parties isn’t stopping there. Today, PivotDesk is exiting the TechStars program, and is looking to take Airbnb’s unused bedroom model and apply it to unused office space.
The company is looking to take office space that has already been leased out, and then in turn provide it on a month-by-month basis to smaller startups. The smaller startups can cancel the short-term agreements at any time as the number of employees change, and won’t be stuck with a multi-year lease. The larger companies can make money off of unused space, and when they finally do need the space for additional employees, they can stop using PivotDesk. The entire transaction is done through PivotDesk, providing a solid business model from the get-go.
With PivotDesk’s pitch for startups, the company is being welcomed with open arms in Boulder. At the local New Tech event earlier this week, the company pitched an audience that is primarily composed of startups, entrepreneurs, and those involved in the local Boulder startup ecosystem.
As a result, the reaction was very favorable. The audience was incredibly enthusiastic, with many people interested in the when and where of availability. After all, providing office space with short-term agreements is relatively risk-free for early stage companies, and anything that mitigates risk for startups is something that’s bound to get plenty of attention and goodwill from the tech community.
Of course, the focus on startups also presents a big risk for the company. After all, what if there is a downturn in the startup market? If startups begin to fail en masse, a big part of PivotDesk’s customer base will disappear. And if the real estate market moves unpredictably? That could be good, if prices begin to rise and PivotDesk begins making more money, or it could be bad, in that PivotDesk is suddenly facing an unpredictable future.
But while the macro risks could prove fatal for the business model, the far riskier part of PivotDesk is that the company isn’t providing protection or insurance for users. If we’ll recall, Airbnb was hit with major backlash last year following the trashing of one user’s residence. Following the scandal, Airbnb instituted a $1 million insurance policy that covers any and all damage that results from Airbnb guests. This insurance policy saved the company from continued and sustained fallout.
I asked PivotDesk at the New Tech event if they had similar plans, but they essentially shrugged it off by answering that, “Airbnb has a lot more money than we do.” That is true, and would normally be an acceptable response. After all, it took a few years before Airbnb implemented its insurance policy, and PivotDesk could theoretically follow the same path. But there’s also a level of trust that needs to exist in business relationships that may not be necessary for personal relationships.
For example, while an Airbnb location may not be great, all the user loses is a night’s sleep. For PivotDesk, if a month-to-month lease falls through, or there is fraudulent activity by users, or if a tenant damages office space, an entire business may be without a place to work. This becomes even more critical when startups begin to have over 10 employees, where moving to a coffee shop for a few weeks isn’t really a viable option anymore.
That being said, the company is aware of the risks. But what really matters is if they will mitigate the risks and address them before they become real problems that hurt other companies.
If they do, the company will be poised to receive big rewards. So far, the company has found office space for over 400 people in downtown Boulder, including companies like Github. For cities like San Francisco, where space is even more scarce, the service will be even more valuable. It’s clear that the opportunity is massive, despite the risks.
Currently, the company is closing its first round of funding, led by Foundry Group. The company did not disclose the details of its fundraising.