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How does OWS affect start-ups?

Guest Post by Parris Khachi, friend of SF New Tech, Founder of Let’s Whoosh, and an all around tech geek with lots on his mind.

So, I only half support these OWS guys. I love that they are out there. I love that they are raising awareness about various injustices. I adore the fact that they are relentless. I just wish they were providing more solutions and demanding more tangible things. Sometimes the whole thing feels like a union strike without demands. I am all for revolution and such (being the data pirate that I am), but I still don’t know how I feel about all this.

One thing they have accomplished is a re-evaluation of standards. While I don’t necessarily think their pseudo class war of the 99% vs 1% is a very accurate picture; I do think it brings up one very fundamental point that hasn’t necessarily been discussed at great lengths. What do we do with all these entrepreneurs that actually make their way into the 1%? Perhaps the OWS movement isn’t really seeking to affect innovators but they are. Sometimes it feels like there is a double standard. In other words no one “hated on” Steve Jobs, a supplier of shiny toys that just happened to be filthy rich; although, they will hate on various bankers. Perhaps they deserve it though (just kidding, well not really, I don’t know).

In any case, consider that entrepreneurs, before any major successes, are generally part of this 99%. Most of us in this category can barely bootstrap our businesses (or can’t at all). There is generally no help for entrepreneurs looking to start something. Sure there are venture capitalists, SMB loans, government grants for certain projects and other forms of assistance; however, the risk of failure and the consequences still fall to the company founder, artist, or entrepreneur. This risk then propagates to future projects and a loss of credibility to some degree. Not to mention what the risk of failure means to all those working with you.

With that much on the line no wonder we expect the pay out to be amazing. Sure we all love what we do and we do it because we are passionate about our creations; however, there is no denying the pressure. Where is the government when people are trying to start their companies and change the world? Sure they provide some government grants, but I’m not really looking to make a missile guidance system right now, nor would I like to make airline security any more invasive. I’d say in this case the OWS is actually stifling innovation and technology rather than being redeemers of the 99%. Why should I, someone who has spent years on the side, doing something interesting, ambitious, great with my life need to pay more tax when I’ve been pouring my own money, time and even health into my company.

What is the solution then? Well, perhaps something like a review board that is part of the government that helps companies start would be useful. Turn the government into a monolithic unix kernel that has its hands in everything and assists everyone. Yes this sounds like Star Trek and I love it! The problem we have now is that both sides are right. People who start business did actually earn the right to be filthy rich and they did it on their own, and guess what most of you helped them in some way. So what are we to do? Well if we don’t want entrepreneurs to feel entitled then we, as a society, need to help them. Having them become starving artists is not a solution at all. If no one earns the right to be in the 1% then no one will be in it. One caveat though, this idea should be limited in scope. It should only seek to kill that 99% vs 1% mock class war. This should solve the tension that OWS has been addressing and it would help propagate our country’s technological fronts.

I am not saying this is the only possible solution. In fact, this is probably the solution that most benefits me (ha); however, I do think that the idea has some merit and we need more IDEAS like this not just complaints. So forum, let’s hear them, let that crazy inner voice come out!

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Then I heard that among the panel of judges at Startup Weekend in Los Angeles were Ashton Kutcher and Demi Moore.

More like "Dude, where's my bubble?"

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The Wall Street Journal recently published an article on how modern Silicon Valley is starting to look a lot like 1999. While the tech industry is more mature than we were 12 years ago, it’s hard to deny that tech’s rise from the recession could very well turn into another unsustainable bubble.

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The Emergence of Coworking: Startups share offices before they scale

The Emergence of Coworking: Startups share offices before they scale

If the Bay Area economy was akin to a baseball game, the technology and startup entrepreneurs are wearing their rally caps and driving in the jobs. As the startup industry grows, led by founders and powered by angel and venture funding, community has become the glue to hold it all together.

Whether it’s a high-profile departure from Facebook or a graduate from MIT, there is a lot on the line in starting a company, and there is tremendous value in surrounding yourself with others who have the same passion and work ethic.

Founders are joining coworking spaces and venture-backed incubators, sharing offices with larger companies, or leasing office space. There are myriad ways to establish your company’s headquarters, but the common denominator to opening an office is community.

At the GigaOM Net:Work Conference in Mission Bay, we held a coworking workshop in which leaders in coworking discussed the new phenomenon. Julian Nachtigal, the mind behind pariSoma which is quintupling in size in San Francisco’s SoMa district, and Jeremy Neuner, CEO of Nextspace with two locations in SF and Santa Cruz.

The message was clear: co-working thrives around community, where entrepreneurs can share best practices, network with various industry professionals and rent a desk to plug a computer in and get to work. If you don’t know what a co-working space is, read this Quora thread.

Coworking @ Parisoma

Coworking @ Parisoma

“Coworking got a jumpstart during the economic crisis and crisis equals opportunity. Lean startups of 2-6 people with early stage seed funding can’t afford to have their own office, and we offer them a solution,” says Julian.

Coworking spaces in SF are growing at rapid paces, with The Hub at the San Francisco Chronicle Building expanding (See San Francisco Chronicle story), SOMA Central taking more space at 153 Townsend, and Rocket Space opened a large 50,000 square feet in SoMa to fit 500 people geared to later stage startups. See my blog post on the launch of RocketSpace.

“Community is the biggest part. People by nature are social. At coworking, entrepreneurs prove their product, raise funding, then choose when to scale and branch out to larger office space. But the community that was started at places like pariSoma lives on,” Julian explains.

Entrepreneurs may leave the co-working, but the coworking certainly doesn’t leave the entrepreneur.

Coworking works in tandem with the office market. “My dream would be to have every person working at NextSpace start an office of their own and grow to be the next Facebook.” Says Jeremy Neuner.

“The trend bodes well for the city because small businesses are expected to contribute significant numbers of jobs in the current economic recovery.” See the full SF Business Times article on coworking, “Tech startups dare to share”.

The Hub

Coworking at The Hub

Owen Thomas, Editor of VentureBeat, tweeted to me the other day, “Silicon Valley used to be about cheap office parks. Now it’s about gathering brains, shortening commutes, and providing for play.” Entrepreneurs are seeking out community in an office space just as they do at a coworking space.

Community is the main reason South of Market and Palo Alto have become the epicenter for startups. The vacancy in Palo Alto hovers around 5%. Similarly, vacancy in South of Market shrinks every quarter and rates have grown to $40 per RSF at the high end. In my article on VentureBeat, I show the tremendous activity going on in SoMa and Palo Alto despite the rising rates.

Companies like Twiliohave opened their own office, but did not isolate themselves in the process. They shared the office with another startup in the beginning, and they have used their office to give back to the community. Take a look at the pictures from the SF New Tech Holiday Party, hosted by none other than Jeff Lawson and the whole Twilio gang at their headquarters on Folsom street.

My client, Thumbtack, a leading marketplace for local services, opened a beautiful office this month in South of Market and wants to encourage groups to work from their space. They have a full kitchen, open layout, loft space and a cook that visits their office two times a day to cook them meals. They certainly will have a great community within their own office! Check out their ad!

2011 is ripe for another tech boom, and the lean startup method with smaller starting offices and coworking spaces will make it sustainable. The Bay Area is on the verge of an exciting year, and more lights will be burning late in coworking spaces and startup offices alike.

We are having a Coworking Unconference event to start SXSW in Austin Texas as well! So if you are planning on going to SXSW, sign up and join the conversation and the movement!

Justin Bedecarré is a real estate advisor for technology and media companies at Cushman & Wakefield, a commercial real estate firm covering the Bay Area. He has represented firms from Fortune 100 to startups in media and technology, including Broadcom, Thomson Reuters, AKQA, and Hearst Corporation, to name a few. He writes a blog on the intersection of technology and commercial real estate at www.BayAreaComRE.com. He can be reached via email at justin.bedecarre@cushwake.com or at About.me, @jtbed on Twitter, Facebook, LinkedIn and Quora

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