New Work City
Founder: Tony Bacigalupo, 27
Location: New York City
Funding: Self-funded; savings of $4,000 spent on a semifurnished sublet
2009 Revenue: $75,000
Start-Up Year: 2008
Breakeven: Immediate -- from membership dues, which range from $30 a month to $550
Insider Insight: No outside funding is necessary. Because co-working centers charge recurring fees, they can be bootstrapped easily.
Blind Spot: It's hard to make a lot of money on memberships alone. Like health clubs that augment revenue with personal training and massages, co-working centers need additional revenue streams, such as classes and events.
When Tony Bacigalupo's boss announced his company was going virtual, Bacigalupo was thrilled to ditch the office. "I'd always dreaded the idea of dragging myself to a 9-to-5 job," he says. "This seemed like the perfect way out."
But after a year spent working out of his childhood bedroom in Greenlawn, New York, Bacigalupo badly missed the office. He had few friends nearby, and his parents had their own jobs, leaving him alone for hours at a time. Personal hygiene and normal social skills fell by the wayside. "That winter, I spent three days in a row without leaving the house," he says. "I was going crazy."
Bacigalupo started wondering why there wasn't a place where freelancers could congregate to work and socialize. He imagined an office with Internet access, desks, conference rooms, and, most important, other people. Unfortunately, nothing like that existed nearby. But he did find a bimonthly meet-up in a New York City apartment in which freelancers, entrepreneurs, and other soloists got together to work and socialize. "I went there as this lonely Long Islander, and I suddenly had 20 incredibly bright friends," he says. "I was hooked on co-working immediately."
Bacigalupo liked it so much that when the organizer left New York for San Francisco, Bacigalupo took charge of the meet-ups. Soon he was encouraging his fellow co-workers to meet in a local coffee shop every day. But taking client phone calls over the hiss of an espresso machine seemed somehow unseemly, so, within a few months, he went looking for a proper office.
New Work City launched in a semifurnished downtown sublet in late 2008. Bacigalupo signed up 15 members, who paid $25 to $500 a month depending on how many days they used the space. He has added members slowly -- there are now 45 -- and the company booked a modest profit in 2009.
Bacigalupo still hasn't taken a salary. Like many entrepreneurs, he bootstrapped the company while working a second job and only recently left it to run New Work City full time. In the meantime, he tried to automate most of the day-to-day tasks involved in managing the company. Members sign up for automatic recurring payments on PayPal, a vast improvement over having to pester a bunch of broke freelancers for the monthly membership fee. He also instituted an honor system for printing costs (free, unless a member prints a superexorbitant amount), food and drinks (members drop $1 in the jar for a Coke), and closing time ("We close when the last person we trust to lock up leaves," Bacigalupo says).
This fall, New Work City will move into a permanent home, a 4,700-square-foot space that will more than double its current capacity and, Bacigalupo hopes, generate enough revenue to allow him to hire an employee or two to handle customer service.
The new space will have 50 desks, as well as couches, beanbag chairs, and a bar. Once the move is complete, Bacigalupo plans to begin offering additional services: classes in how to go into business for oneself and sponsored events for freelancers (hence the bar). New Work City may also make money by offering consulting services to other co-working centers -- last year, the company booked its first such assignment, helping the nonprofit Alliance for Downtown New York set up its own co-working center.
"We're in the middle of a revolution in which huge swaths of the work force will shift to working from home," Bacigalupo says. "New Work City is a platform to take advantage of that."