I have yet to meet a startup with a linear path from inception to exit. The vast majority travel a circuitous path of upsides, challenges and dead ends. That said, every journey is unique.
The factors shaping the journey range from the concept and the team to the products and the marketplace. External macroeconomic issues like inflation, stock market conditions, politics (national and global) and unemployment levels play more than a small role as well. Then, despite the best planning and most favorable conditions, successful navigation is sometimes the simple byproduct of good luck.
Having launched in Silicon Valley, my co-founders and I faced the gritty realities of expensive office rental rates, high cost of living, inflated employee salaries, cutthroat competition for talent against established companies, unpredictable investment scenarios and even local politics — just to name a few.
While some of these challenges were unique to our location, all new companies will encounter hurdles and competition. Every day, especially during the pivotal first few months, will surprise you and test your soul, spirit and sanity. The only reliable prediction is that you will be confronted with the unpredictable. The unpredictable for us arrived in the form of a fight against City Hall.
My co-founders and I left the Hero City co-working space in San Mateo and set off for “the City” (as San Francisco was known locally). We could never have anticipated the lack of clean, functional and affordable office space. As a small startup, Loopd was big on ideas but limited on resources as we waited to finalize fundraising.
At last, we found a large, second-floor suite in one of the last faux Victorians in the up-and-coming South of Market (SoMa) area in San Francisco. In 2014, this neighborhood was a study in contrasts: rundown affordable apartment buildings and auto-repair shops next to new, multimillion-dollar condos and office suites. For Loopd, having an office was a safeguard for our ideas and a substrate to build our company on. Having an office in the right location was critical for growth and success. It was the perfect situation — until we faced eviction.
Soon after we settled in, our landlord received a zoning violation notice with a hefty daily fine from the San Francisco Planning Department. A pro-housing neighborhood watch group had reported us after we started working in the faux Victorian. Although the house was zoned residential, this zoning had often been ignored in the past, but not for software companies.
We knew this was a potential risk from the outset, but enforcement seemed remote and unlikely. Why would they target a nascent company of unobtrusive engineers? We decided to fight. With the cooperation of our landlord, we appealed the notice and had a hearing before an administrative judge. He was fair and expressed his support of the startup economy, but he said that the law favored the neighborhood watch group. While he did not deny our petition, he did advise us to find a new space and gave us an additional 30 days to do so.
The takeaway from this office space saga is that unexpected situations are the norm. Sure, we could have left San Francisco at any time for a less expensive, more accommodating city, but we would have lost more than we gained. We did open an office in Taiwan in order to hire programmers and minimize our San Francisco-based team, but there were certain elements of SoMa that made it appealing, including easy access to investors and hardware engineering talent.
As you scale up your own startup and seek out office space, consider these tips to mitigate the challenges:
Take advantage of the right co-working spaces.
As a result of the expanding startup economy, the co-working market has become very diverse over the past few years. You can now find different functional spaces for your team and even find layouts that are designed for engineering and sales teams. WeWork, Knotel, Spacious and Croissant all provide freedom and flexibility when it comes to finding a safe and high-quality work environment.
Consider establishing your office in a secondary city.
You don’t always have to be located right in the middle of the action. While an office in a major hub like New York, Los Angeles or San Francisco may help your startup in terms of fundraising, partnerships and business development, it’s not always the most strategic decision. You can reduce your burn rate, grow your inside sales and marketing team and scale a remote engineering team by looking at cities such as Salt Lake City and Kansas City.
Complete your due diligence.
Before you move into a new office, make sure to ask the landlord and your real estate agent all of the pertinent questions around the zoning of the office space. You should receive physical confirmation that shows that the space allows software and/or manufacturing companies. You may trust your real estate agent, but it’s still your responsibility to minimize your risk by receiving legal approval that you can leverage in the future.
Always be ready to adapt.
Most importantly, remain optimistic and flexible when looking to move into a new office. You can’t always predict what will happen with an office space. The landlord could decide to raise your rent, your team could outgrow the office or your team could decide one day that they don’t like working in the office. You should be aware of potential changes that would affect your office space and team culture. Always have a plan B ready to go in case you face a dilemma like I did with my startup.
As you launch and build a company, expect the unexpected. Whatever your nemesis, whether office space scarcity, product hiccups, employee behavior or local politics, choose optimism and flexibility. Persist despite the hardships and remain open to the lucky opportunities that can come as a byproduct of the challenges.
Read more: Forbes