Gate 3 Workclub goes under

Lessons learned from a failed experiment

Eight months after I profiled it for the “When you can’t work from home” series, Gate 3 Workclub has shut down, out of money.

Too bad, given Gate 3 was the most innovative workcenter projects I’ve encountered; and its founder, Neil Goldberg, the keenest student of the emerging “third place” to work movement I’ve met. 

To recap: When Goldberg - an industrial designer, architect and consumer product developer - couldn’t lease or sell profitably his 14,000-square-foot warehouse in Emeryville, Calif. (Bay Area), he got creative and turned it into a “workclub” - a telework center with a unique personality modeled after a health club.

Goldberg gave a lot of thought to how people work and built the place to suit a variety of styles. He created common areas (lounges), touchdown spaces (cubicles) and team spaces, then broke the touchdown spaces into neighborhoods (buzz zone, hush zone and inner sanctum), and added amenities such as full-time reception, tech and business services, and a café.

Goldberg’s approach to members was also unique. He invited folks in early, before the place was finished, as guinea pigs, eliciting feedback and making changes to suit their needs.

In essence, Goldberg built the perfect work environment. But in the end he couldn’t sustain a business. What went wrong?

“The model was great, everybody loved it. But I assumed we would gain 30 or 40 new members a month, based on all the positive feedback,” he says.

In reality, Goldberg gained only 10 to 15. “When you ask people to modify their behavior, they take their time,” he says. “Where to work is a real estate decision, like moving into a new house. Trouble was, our concept was so new it was going to take a lot of time and money to get people to just come in and look.” 

Even as he cut prices, (base service $135 per month), members resisted. Many took a wait-and-see approach, a self-fulfilling prophesy. Goldberg needed much more money for marketing, and a much longer lead time to get people used to the idea.

Another problem: the café. “Managing food is a nightmare. Anybody will tell you, if you don’t know food, don’t go into the restaurant business,” he says.

Last, Goldberg expected many local area companies to send a few employees to the workclub, but “that just didn’t happen,” he says.

But Goldberg’s not giving up. Always learning, he’s launched a blog encouraging members and fans to tell their stories and brainstorm the precise notion of a workclub, and “how we can start bringing it about in small, doable ways.”

Although he’s selling the building, Goldberg’s also exploring a variety of alternative business models, partners and investors. One idea is to team with a business with an existing revenue stream, such as an executive suite, events business or chain of coffee houses.

“There’s a huge hunger for alternative work arrangements - but it’s at the grass roots level, where there’s no money,” he says. “But once it’s in place, whoever owns the brand will make a lot of money.”

Of course, now I need to check the health of all the other alternative work centers I profiled last year. Stay tuned.

Learn more about this topic

Gate Workclub blog

When you can’t work from home

Network World, 06/14/04

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