Last Woman Standing: After 2020, One Women's Coworking Company Remains
Grow Your Business, Not Your Inbox
The pandemic has been brutal for coworking and flexible space. In the second quarter of 2020, U.S. leasing for flex office space was down 45 percent year-over-year, according to CBRE. Case in point, the dramatic rise and fall of WeWork has made headlines for more than a year. NY-based Knotel, which reached a valuation of more than $1B in 2019, filed for bankruptcy on January 31.
The fallout has been severe for female coworking spaces as well. Seattle-based startup The Riveter raised a total of $27.2 million and was lauded as one of Seattle’s most promising startups, but closed all nine of its spaces in May 2020. The Wing, which raised $117.5 million, closed its doors in October 2020 after being pummeled by the pandemic lockdown alongside fallout from reports of LBGTQ and racial inequality.
This leaves 10-year-old San Diego company Hera Hub, with 6 locations, as the lone survivor of national coworking facilities created exclusively for female entrepreneurs. The company is thriving, with plans for expansion through 2021 and beyond.
How is this possible? Ahead of International Women’s Day 2021, founder Felena Hanson shared the strategies that have helped Hera Hub to succeed.
Why did she start this business?
“I spent my 20s working in marketing for startups and had the 'pleasure' of being laid off three times by the age of 30," Hanson says. "One was a marketing agency; one was a tech recruiting firm and the third was a pure technology startup. Two were sold; one ran out of money. It was a big reflection point for me, as both of my parents are entrepreneurs. I began to realize that I need to control my own destiny versus leaving my livelihood in the hands of someone else.”
“So at age 30 I started my own marketing strategy agency, which allowed me to work at home,” she continues. “I also taught college part time and hosted an event for my students in a coworking space that had just opened in March 2010. I thought, ‘This is cool — it's like working alone, together.’ But the space was targeted, as many coworking spaces are, to a much younger, tech-focused demographic. It wasn’t my tribe.”
She thought, why not open a facility to focus on female entrepreneurs? Though — the timing couldn’t have been more difficult: “We were just starting to emerge from the biggest economic shock we had seen in decade.”
There were only around 500 coworking spaces in the U.S. at the time, she noted. Today there are more than 5,000.
“At the time we opened there was only one female-focused space in New York City, and they closed the following year,” she said. “WeWork was just getting started.”
First in category, but with a focus on culture
After founding in San Diego, CA in 2011, the company took its first steps toward going national in 2015, using a collaborative licensing model instead of traditional leases with the owners of the spaces they use. The company established an anchoring point on the east coast in Washington D.C. and now operates six facilities. Through a partnership with CommonGrounds Workplaces they will be opening three additional locations this year, in San Jose, Salt Lake City, and Minneapolis.
Slow and steady growth wins the day
Instead of venture funding, Hanson invested her own money and then took “a small amount” of angel financing about two years into starting the business. She has funded all additional growth with reinvestment of revenues as the model grows.
“We expanded internationally a couple years ago into Sweden," Hanson says. “But unfortunately, with Covid, that location was not able to maintain operation. So at the moment we’re only based in the U.S., but we have high hopes to continue to connect women city to city and country to country, to give them new opportunities to build their business.”
One of Hanson’s big secrets for keeping her business strong when the others in her category have faltered is that Hera Hub is focused on core business acumen. “It’s not a social club, which can be trendy for a while but may lose the ‘cool’ factor after a few years,” she says.
But the even bigger secret for success is in growing its female-focused mission in a “culture of abundance and collaboration, versus what can feel like a backlash to the establishment,” Hanson says.
Hera isn't rooted in activism
In 2016, and especially around the time of the last presidential election, the mood around support for women was immersed in political activism and advocacy for women in the workplace, Hanson notes. Hera’s focus is on helping to provide female founders with the vital tools, skills and support to launch their own businesses — which she sees as a-political.
“We call ourselves a coworking space and ‘just in time’ business accelerator,” she says.
Hanson believes Hera's business-forward brand is distinct from other women's coworking spaces. The Riveter launched in 2016, operating with a focus on large events and on women’s rights and advocacy as a primary message. Citing the pandemic's impact on their revenue, the company closed all facilities in May 2020. According to a statement, it is working to pivot to support its database of 30,000 members through online and virtual means.
The Wing's self-professed culture of activism backfired when a group of former employees formed a group called “Flew the Coop” that called leaders out in lawsuits, accusing the firm of hypocrisy in its statements of support for equality and diversity. The lawsuits resulted in a public apology by the company’s former CEO, followed by her resignation in mid 2020. The company’s facilities were shuttered soon after, but there are reports of an acquisition that could result in a restart in late 2021.
It’s all about the vision
Hera Hub is a “Public Benefit Corporation,” which commits the company to higher standards of purpose, accountability and transparency than other corporation forms. That format and accountability, Hanson says, is one of its keys to success.
“We’ve supported more than 13,000 entrepreneurs in the launch or growth of their business,” Hanson says. “It is so rewarding to bring someone in who is brand new in business and really help them from day one. We help them build the foundation of their business, find the mentoring and resources they need and have an opportunity to see them flourish.”
With the company’s vision to grow and support female entrepreneurs, the members who join Hera Hub are typically seasoned female executives transitioning to solopreneurs. This follows the national trend, which shows that 90 percent of female business owners have zero full-time employees.
Related: The Motherhood Recession
Why do female-owned ventures struggle?
“I wouldn’t say outright that we play small, but female entrepreneurs have a greater tendency to play small than their male counterparts,” Hanson says. “A lot of us have families we're trying to take care of and with Covid-19 in particular we’re seeing millions of women leave the workplace because it’s impossible to balance distance learning while trying to work from home."
“Our members are mostly small business owners, many of whom are providing a service — not the new tech startup who’s trying to raise $10 million to grow fast,” Hanson says.
As an example she mentions Hera Hub member Tristan Higgens, who was a corporate attorney for Sony Electronics for a decade. She realized she was so passionate about DEI (diversity, equity, and inclusion) that she left her 20 year corporate career to launch Metaclusive, to be keynote speaker, consultant, and facilitator in that space. This was Tristan’s first business, so she needed to be able to turn to people she trusts and can be vulnerable enough with to say, “I don't know what I'm doing, I need help.” And in a co-ed environment we sometimes don't feel comfortable enough to do this.
“While we are female-focused, we are also gender inclusive,” Hanson continues. “We have a beautiful and spa-like atmosphere that is designed to not only be beautiful, but also to be safe, supportive and nurturing. If men like the working environment we offer and want to join in, they are welcome.”
Hanson’s biggest regrets
Hanson’s only potential regret is perhaps not having obtained more knowledge and connections in the commercial real estate industry before she began. But she has no misgivings about growing in a model that is almost entirely bootstrapped rather than supported by venture capital funds.
“When you take in a lot of money, you tend to spend a lot of money,” she observes. “Scaling is expensive. But on taking in millions of dollars of investment money… I don’t know that I’d sleep well at night knowing I’d taken millions of dollars from somebody and worrying about giving them a return on their investment.”
Conversely, however, big investment can bring the momentum of investors who are able to shop your company to some of the biggest enterprises in the world for partnerships and to ensure the biggest possible exit and return on investment.
In terms of roadblocks to female-owned companies, Hanson observes that the statistics on the hurdles of getting investment are real. But she also acknowledges that on the whole, female owners sometimes have a harder time than male counterparts in “thinking big,” given all the competing demands in their life. .
In hindsight, Hanson’s only real regret is wishing she’d had stronger relationships or money behind some of the real estate deals she’d like to have done. However, growing Hera Hub in its collaborative “space within a space” model is serving her company well.
Overall, she sees high demand for female-focused resources and anticipates big growth opportunities for Hera Hub in 2021.