Momentum Podcast: 782
Beware of Office Ego Space
by Alex Charfen
To be added.
One of the most common mistakes entrepreneurs find themselves making is judging the success of their business on the size of their office space. Here's the reality, holding onto office space for the sake of ego can crush your business.
I know, I've been there.
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Full Audio Transcript
This is the Momentum podcast. I think one of the greatest services that I can provide to you as an entrepreneur and really any entrepreneur can provide to another is to share our biggest mistakes. Where are what are the things that we've done and that have caused us issues that have slowed us down, that have damaged our companies, that have lost us money that we could have avoided? And man, do I have a big one for you? It's ego, office space and really land and office space in general is something to be very careful of now. I'm certainly not saying your business shouldn't have office space. I'm not saying that you shouldn't think about, you know, getting some space together. But in a world in the world today, the way that we can use virtual teams, you should really consider, do you need office space? You need everyone to be in the same place. And this is a lesson I've had to learn more than once, and it has been painful. I'm Alex Charfen, and this is the Momentum podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny. We define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority. The few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution and we always will be. Years ago, Cadey and I were running a coaching business, and it started to scale and it started doing pretty well, and we ran a smaller office and we were moving out of that office into a larger one. And I started having these dreams of like I won an office where I can hold events and I want an office where my whole team can be there and people can come in and work. And there's a space for my friends to come in and we got this huge office in Austin and it was awesome. I mean, everybody that came thought it was amazing. In fact, a lot of people flew from around the world just to come check out the office when we opened it. We had people come from all over the country. I think we had like 80 90 people who traveled to the grand opening party and we did a grand opening event and we had a ton of people from Austin attend. It was a beautiful office space, but I didn't really need it. You know, I had this, this dream of having events in the office space. We had an event space there. You know what happened on like the second or third event? We sold more tickets than we could fit in the office space and we had to go somewhere else. And so we weren't even using the event space. I was totally constricted in that office. And then when we moved into it, we had a pretty decent sized team, but we weren't filling the office space. So I let some other people that I know use some of it. And then the business that we were running shifted and we didn't need as many people on our team. So then we had a bunch of open and empty office space. And I ended up having to buy my way out of the lease and so that we could go and we had to like help the people who were renting and we had to help the company find other people to rent it or either buy our way out and we had to buy our way up. And it was painful. It was painful because for months we were paying thousands of dollars that we didn't need to spend. It was painful because the company that we had was now challenged by the office space. And prior to that, we didn't have a real issue because the space we had been in was inexpensive. It was painful because there was a point in time where all of us had to work remotely and it worked great. This was way before we go, but it worked great and I realized we could have just all worked remotely. And if we needed to get together, we could have rented a space to get together and gotten together in in the the big meeting area that we have in my house or something else like that, or gone to a on executive suite and use that type of a place. And you know, I beat myself up, I kicked myself over it. But, you know, as a consultant and as a coach, I've watched so many entrepreneurs do this and you probably have to, you know, a lot of times when people are advertising or just showing off their office space on Facebook or social media, what you don't know is that the bill is massive and when you don't know is they really don't need all that space. And what you don't know is are probably not going to utilize all that space. And here's what happens when you make a decision to move into office space with your ego, and it's hard for me to admit like I'm getting body reactions even talking to you about it. But I made office based decisions based on ego. I wanted really cool office space. I wanted it to look amazing. I wanted everybody to be excited about it. I wanted people to come for the offices. And so here are some of the things that happened. One For events, we realized we were constructed by the size of our office, so more than once we ended up using somewhere else too. We learned or I've learned over the through the process that I was starting to make decisions for the office space. We would say, Oh, we want to do this happen promotion, I would think, no, but we're not using the office and people would say but Alex. This type of promotion could work. But then we weren't. We're not going to utilize the space that we have. And so we actually started bending decisions. Not for long, thankfully, but we did for a while been decisions around the office space, like when I look back at it now, I'm embarrassed to even tell you we did that. When you have a huge office space, it doesn't just make make decisions for you. It influences all your planning influences. What you're thinking is like, what can we do as a company, what we have today for the office and we have to make sure that we we use the office and we have to make sure that it's utilized. And it's either that or you have to kind of pretend that it's not there. And I know there's entrepreneurs. If you're listening to this podcast and you've been in the office where you pretend like that space, this empty isn't there and you're like, Hey, someday we'll use it and you just like, start to ignore it and you shut it out. But it creates pressure and you know you're spending money on it. I can empathize. I have absolutely been there. And then, you know, that's a reality about the office spaces that won the office space creates pressure. You are in a tough place as an entrepreneur. And I've seen this so many times. Just recently, I went in and had a meeting with an entrepreneur here in Austin that's running a phenomenal company growing like crazy. But he had 14 people in an office that fit in, probably 20 percent of his office. And I could feel it in my stomach like, Oh, I've made this decision. I made this huge commitment to space, this huge commitment to rent, this huge commitment to to all the furniture and making it look right and filling it out. And his office space looked relatively empty and kind of uninhabited. It looked like they had just moved in. But I can tell you it's going to look like they moved him for a while or entrepreneurs by a whole bunch of furniture for an office and nobody uses. And there's not actually people. And you end up with this office space is nothing more than an ego play and and it's hard for me to admit that, you know, I think the hardest mistakes for me to admit in my entire career are the ones where I made a mistake because my ego got in the way because I wanted to look cool. I wanted to be cool. I wanted to feel cool. And here's what I shared with. That entrepreneur, when we met with him, be more proud of your margins than your office space. That was the lesson I learned out of making that massive mistake on outer space here in Austin was that I should be more proud of how much money my company was making than the office space we're in. And so here's the solutions we use instead, because now we have a fully distributed team of a team around the world. I don't pay anything for office space. There's not one and there's not one team member that doesn't work out of their house or have a permanent space that they can work in, and it causes near zero problems. Within the time that we've been doing this, we might have one or two issues where somebody has something, something going on at their house and they had to go somewhere else. But it always gets resolved. And when I had an office space, I had issues with the space. I had issues with the furniture. I had issues with making pain, paying for all of it, making sure that you know, and as we most of the time when I've had office space there, this thing called Common Area Management Cam, which is a variable part of the rent and oftentimes that goes up. And so I committed to one number and my numbers started going up when I with a distributed team, we haven't had that issue long at all. And for events, we've partnered with a local hotel where we can do anything from small, intimate to 30 person, actually a small, intimate 14 person event in a conference room, 30 person events in a nice little meeting space meeting area. We can do 50 to 100 person events. We can even do 500 person events. So no matter what size event we have, they're paying for the space right up until we need to use it, and it's a fraction of the office space. And when it comes to having anything else and we need to do. There's always a place where we can go rent and it costs us almost nothing compared to what we used to pay for rent and what we used to pay for this massive space that we had that we were trying to fill. And so this is not saying you should never get office space. This is me saying if you're going to get office space, ask yourself, do you really need it? Is all of it going to be utilized or do you know you're going to grow into it in a time period where it makes sense to get it now? And do you really want it big and is it going to benefit your business? Is it going to help you scale is going to help you grow? Do you need to have everybody in person? Because one of the biggest liabilities in business and business for every business out there, biggest liability is normally customer acquisition. How do I get more people in the door? The second liability for anybody who's in-person is the real estate. And here's why you start to grow in scale your business. You have this really nice office space. Now you have to go find a new one. And soon, as soon as you find a lease and you sign it, you're on a countdown timer before you have to do it again. And so and and is as you need to buy furniture and insurance and all the other things to fill the office, the bills stack up like crazy. So if you can, having a virtual team is one of the best options to scale like crazy. You know, I worked with an incredible couple. Alex and Layla are Mosey, who grew Jim launch and recently exited that business, and they went from zero to over 100 employees in a matter of like under two years. And I remember thinking and talking to them about, Can you imagine if you guys had to have office space that you had shifted this many times in two years? Do you imagine that a 20 person office like, OK, we need to have a 40 person office and that was 40 and they're like, Oh man, we need an 80 person office. And then they jammed that floor and then they need 100 person office, running a virtual team and having everyone be responsible for their location and exiting the real estate game is one of the most. It is the easiest way to scale. Instead of using an office and when you eliminate real estate, it makes things so much easier and somebody just works in their own space and you don't have to be responsible for it. So be careful, be aware and watch yourself when you're getting office space and learn from the disastrous mistakes I've made. And by the way, I might do another podcast or two on office space in the future and share some of the crazy decisions that I've watched, not just entrepreneurs, but executives in international business businesses make around office space. I've seen it go off ego office space more than one or sorry, more than once. Unfortunately, I didn't learn from it the first time I saw it. I had to go through the experience myself. Maybe you don't have to. Thanks for being here. And if you're interested in understanding how to simplify your business, how to run a virtual team where you are 100 percent sure every person on your team is doing the right things. They're fully utilized and they're making things happen for you. Go to simple operations dot com. Sign up for a call with my team. We'd love to share with you what we do to simplify operations for our entrepreneurs and help you grow and scale your business without feeling like you have to do it all yourself. Simple operations dot com. Thanks for being here with me today.