Jeff Robbins interviews Frank Cottle, CEO and Founder of Alliance Virtual Offices, about the history of remote work, where the industry is headed, and virtual reality in the workplace.
Discussion Topics
- What was it like to work remotely in the 1960s up till now?
- The difference between “presence” and “productivity” in the workplace
- How can remote work and flexibility affect business profitability?
- Workplaces are “wherever you have an internet connection”
- Location independence for remote workers and using technology to localize work
- The future of office-ing and how that could affect commercial real estate
- Why almost every company needs to think of themselves as a global company
- How to know when people are working if they work remotely
- Using data to drive the metrics around employee productivity, helping them to improve and thrive in a distributed team environment
- What could virtual reality office-ing look like?
- Increasing trends in open collaboration
- Not only changing the way people work, but the world they work within
About The Yonder
Yonder’s mission is to redefine workplace and inspire employment nirvana. We believe that free-range work is the future and that both large and small businesses will benefit by creating a more flexible workforce. We are remote work advocates and experts. We run conferences, workshops, and a popular podcast.
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Transcripts:
Jeff Robbins [00:00:02] This is Yonder.
Jeff Robbins [00:00:23] Hello, everyone, it’s Jeff Robbins, and this is Episode 63 of the yonder podcast, where we talk to company leaders and big thinkers about how to make remote work, work. We’re focused on expanding the remote work job market and helping listeners to create happy, productive, distributed teams. This week, we’re talking to Frank Cottle who is the CEO and founder of the Alliance Business Group, which runs Alliance virtual offices and coworking spaces all around the world. Frank has been doing this for over 40 years. He’s a veteran of remote work and has lots of thoughts and ideas and observations and is able to sort of look back into the history of remote work and kind of help us understand. Well, help us understand the history of it, but also help us understand sort of where things are going in the future, including some really interesting ideas that hadn’t really thought about before, like virtual reality, workspaces and things like that. So interesting conversation with Frank Cottle coming up, if you’re not already subscribed to the Yonder newsletter Yonder.io/newsletter’s where you should go to subscribe and we will send you updates about podcasts and articles and things that we found around the web to keep you informed about the remote work world. Stay on the cutting edge, know the latest things. Keep up with what everyone’s talking about or what some people are talking about that you should also be talking about. We’ll keep you updated. Yonder.io/newsletters where you can go to subscribe for that. And of course, if you’re not subscribed to the podcast, if you’re not getting it downloaded in your podcast listening app or device every time it comes out, you can do that at Yonder.io as well, I Tunes, Google Play, Stitcher. You’ll find links for all those things there. So go do that. All right, let’s talk to Frank Cottle.
Jeff Robbins [00:02:43] Hi, Frank. Thanks for coming on the yonder podcast.
Frank Cottle [00:02:47] Well, my pleasure, Jeff.
Jeff Robbins [00:02:48] Yeah. It’s great to have you here. First of all, I wanted to tell people where you’re talking to us from.
Frank Cottle [00:02:58] Well, today I’m in Newport Beach in Southern California. The bright, sunny day and the ocean’s lovely.
Jeff Robbins [00:03:05] I’m jealous. I’m in New England here where we’re sort of in that stage where we think that we’re thawing out and then things freeze up and more snowfalls and then that thaws out. So it’s just a lot of slush, really.
Frank Cottle [00:03:20] And I’m already putting on most by my spring or summer wetsuit preserving, so…
Jeff Robbins [00:03:25] Well, yes, I actually should get out my winter wetsuit and maybe make the most of just this wet weather and Rhode Island, and once you get out…
Frank Cottle [00:03:35] You look kind of silly driving around in it, though, I’ve got to say.
Jeff Robbins [00:03:39] Well, you got you can’t get out of it at the beach. Let’s see, so why don’t you introduce yourself to people. You’re sort of involved in a bunch of different things. How do you explain that to people?
Frank Cottle [00:03:58] But I try and try not to or I’d say usually with a Margarita, it goes over better. I’m the founding chairman and CEO of the Alliance Business Centers Group of Companies. We’ve been in the serviced office industry, flexible workspace, sector coworking, all of those sorts of things. In one form or another, for 40 years now, we’re one of the founders of the industry. Going back to the late 70s, early 80s, we’ve always led with technology as a company. Before we started this company, I basically raced yachts and worked as a commercial diver, when I started my career. So if you want to say I’ve been doing remote work, you know, since 1969 or 70 as managing crews, managing logistics, all of those things is just something that I’ve done all of my life.
Jeff Robbins [00:05:02] Well, let’s start there, then, let’s kind of dig in. I mean, what did coworking what did remote work look like back in the… Well, I, you know, you say you started in this business 40 years ago, but around then and even, you know, in this 60s, 70s and 80s, I suppose, huh, pre, pre could dial-up modems even, right?
Frank Cottle [00:05:30] Oh, yes. Yes. Well, you know, it’s funny. When we first started, you’ll laugh at this, the very first project that we had, we actually had a telex and because that was the most effective way to transmit contracts overseas. So we’ve seen everything from 300 baud modems where you took the handset of your phone and stuck it onto the modem, you know, on up through today…
Jeff Robbins [00:06:02] I’m trying to remember what a telex machine was. Its pre also brief prefect’s, right? It was a little Prefect’s monitor.
Frank Cottle [00:06:10] No, it looked like a keyboard, it was a keyboard and you’ve seen it. Pictures, old teletypes. Yeah. You know, the old movie is where you see the stock tickers going and the teletype take me well all that is the telexes, the more modern version of that. But you still had a ticker tape and it read everything into it. And this really is how like reporters were… And a large story, it’s just an analog keyboard. Yeah. Really, but when we built our very first center, our very first center, we built in 1979-80. We built an executive suite complex and we started out really building the buildings, too. So we started building buildings across the southwestern U.S., California, Arizona and Texas. And even then our first building, we had video conferencing in 1980, we had back then, in order to get the systems to speak to each other, they’re all different. We had to have a contractor with a codex and all sorts of things from the systems could talk to each other, cost you about 125 dollars an hour to that video call on each end.
Jeff Robbins [00:07:31] Right, yeah.
Frank Cottle [00:07:33] Still cheaper than flying, though and we also set up a joint venture, right. When we started the company with Bell Labs. That’s when guys were running around in white coats and plastic pocket protectors with their slide rules. And we were the first commercial installation that simultaneously broadcast voice and data over for pure twisted cable. So on our very first buildings, on every desktop, we had a voice and data terminal interconnected with a large mini computer onsite in our server room and a large digital switch, one of the first digital switches built that we custom built a piece of hardware with Bell Labs called a Mux Box, so we could use the same for Perret twisted cable today. So that was really the leading edge of network management. And that was all done in 1980 and you have to remember, 1980, you didn’t have P.C’s.
Jeff Robbins [00:08:41] No, no, not at home.
Frank Cottle [00:08:42] We had terminals on every desk simultaneous voice and data built in word processing built into really a suite of services, email, etc..
Jeff Robbins [00:08:53] So terminals, meaning they were connected to a cellular mainframe computer that was in the basement of the building.
Frank Cottle [00:08:59] That is correct. Right? That is correct. Yeah. And so we pushed that edge in and found out that we were just too far ahead of ourselves. After half a dozen buildings like that, we thought, wait a second, nobody understands what we’re doing here. They love it, but they won’t pay us anymore for it, and then we did the first commercial installation of ISDN, too, with the GTE. It was sort of like the old Edison and Watson test in their building was on one side of the parking lot and our building was on the other, and we said, Can you hear me now? Yes. Not only can I hear you hear you know how good I can be, OK? Can you transmit some data? And so it was it was pioneering days. But when you think of remote work, we had to have a combination of things, we had to have technology to allow it, number one, we had to have attitudes to manage it in the forefront of the remote working era. If most managers if they couldn’t see you, they didn’t think you were working right. Were based on presence as opposed to productivity. And today we know that that’s still important because community and culturally you want to be around your peers, but it has nothing to do with productivity anymore or very little to do with productivity. The other issue around remote work was the remote worker themselves, today most people say, oh, I like to work remotely or I want to work remotely some of the time. Back then, people thought they were almost getting fired if their remote worked. Oh, you’re going to work remotely. Oh, I’m. You’re fired. I’m not on the fast track anymore. Nobody’s gonna see me working I won’t be able to bump into the boss. All these problems that came along.
Jeff Robbins [00:11:00] And remote working wasn’t so much. I mean, now there’s it’s oftentimes spoke of synonymously with working from home. But back then, it would be the single representative that was in that city.
Frank Cottle [00:11:17] Oftentimes it really was you’re roadway your type. Right. Oftentimes and with the emergence of executive suites, which recalled back then, very efficient small offices to act as branches for larger companies and things, then remote working became much more professional. And I think our industry added that layer of professionalism and it also dealt with a lot of problems around remote work. You know, human beings are gregarious we like being around other human beings, sometimes I don’t know why, but we do. And so it the all the things we see today in coworking around community. And when we speak around building cultures inside of a companies, well, it’s very hard to do if everybody’s a remote worker. Technology is built many bridges for that, but the physical manifestation of coworking or of community, a lot of times it’s a coworking or a business center, and that allows us to enjoy each other’s company and yet have a professional workplace environment. And there’s a lot of business reasons why that’s important, not just personal reasons.
Jeff Robbins [00:12:48] Yeah, yeah, that’s, it’s just it’s interesting to think of sort of the trajectory starting so far back is that I think oftentimes we think of this about remote working is sort of something that, you know, perhaps evolved out of high speed Internet or maybe even just being able to, you know, dial up networking to be able to connect us, but it really predates all of that by quite a bit.
Frank Cottle [00:13:21] Well, no, it does and I think what you’re talking about when you say we it a generational issue and all generations, all generations think they invented peace and sex. And no one remembers that there’s actually standing on the shoulders of those that have come before them so, you know, I feel the same way, I think I invented this industry. And yet I know others that we’re doing’s like in similar things in the late 40s and early 50s. Yeah. So we always have to look back in order to find ourselves and to find our roots so that we know what we’re building on and that’s what gives us the best path.
Jeff Robbins [00:14:08] Yes. So as you look at this sort of long trajectory and you too, and you talk about sort of gregariousness and people needing to connect in the real world as well as the virtual world. How… How do you like what trends have you seen over time with that? I mean, you know, people who are working who were the people who were working in these executive suites and did they connect to one another or did they remain both, you know, kind of isolated? And are people now more willing to connect?
Frank Cottle [00:14:53] And I don’t think there’s been too much difference, honestly. The great majority of people that came into the first executive suites were legal, accounting and financial services professionals, which a big percentage of startup businesses always and branch offices, usually sales offices or marketing offices and as technology developed small technology companies. That’s sort of a foundational part. One of the biggest migrations so that we’ve seen is what we referred to just generically as the corporate back in the 80s and 90s. If Cisco, let’s say, was going to use an executive suite or the name evolved the business center or a serviced office, and now we call them coworking centers, if they were going to use a center back then, they would have been using it tactically. Hey, we got a project in Dallas we’ve got to get a team there for six months. Oh, get one of those dumb executive suites because we don’t want a permanent office. Now, when Cisco looks at their strategic positioning, they say, hey, 25 percent of all of our employees are contractors. We have 1-3 year contracts with them we don’t want 10 year leases on permanent space for one year contractors, I know, let’s put them in a coworking center. So they’re using our industry strategically based on changes in employment models which are based on technology. So there’s just this whole what we call the flexible hours that’s come about and it requires the combination of people, place and technology together, changes in management, changes in employment, structure changes and regulation oftentimes and ultimately what it comes down to, why is Cisco changed? So the contracting model? Well, it’s more profitable for them, number one, number two, it impacts their balance sheet quite a bit because if you can have a contract with a third of your employees and get those employees into one year service agreement offices instead of 10 year leases or purchased offices, the impact on your balance sheet and therefore your shareholder price is substantial. So all of these things are underlying foundational drivers to what we’re seeing in flexibility and in remote working today. It’s not just it’s cool and it’s not just I couldn’t get a job so I’m an entrepreneur. It’s really a lot of underlying issues and even take our U.S. federal government as an example. I don’t know if I can say this with accuracy, but generally the one thing that all parties in our government have to agree to every year is a budget. And it’s one year budget. So why would they want to take on 10, 20, 30 year liabilities in a one year budget?
Jeff Robbins [00:18:19] Right, especially when you don’t know what the future of your business is.
Frank Cottle [00:18:22] Exactly or where it is, where it is and this is what’s so important. So, even government today is a huge utilizers user of our services and centers within our industry and is one of the actually fastest growing sectors.
Jeff Robbins [00:18:41] Interesting, yeah, yeah. It has done so since that the move has been sort of from a more tactical stance to more strategic stance. Is the makeup of people in these, as we call them now, coworking spaces changed?
Frank Cottle [00:19:03] Yeah, we have better beards today than we did back in the 90s.
Jeff Robbins [00:19:09] Back then, it was all professions that weren’t beard friendly.
Frank Cottle [00:19:16] No professions were not beard friendly. And, you know, you couldn’t go wrong in 1980 by going to work for IBM as long as you had three blue suits you were OK.
Jeff Robbins [00:19:26] No beard.
Frank Cottle [00:19:27] No beard but I don’t know, facial hair at all. So, no, I things have changed. And I think mostly the biggest driver for change is convenience of works today. You can be working from your home you can be working from an office. I used to have a really lovely big office, you know, Fuze over the ocean and all this kind of thing. And now I have about five little offices scattered around because really it works better today with the old term for a person in an office working for a company of the real estate term was there an occupier? OK. We’ve been looking at people as in the workplace, as travelers for about the last 10 years, we don’t think of anybody as an occupier anymore, we think of everybody as a traveler. And that’s really the way we work today, I work this morning at Starbucks for a half an hour. I stopped on my way someplace else and worked in the mother coworking center because I’ve got a travel card that allows me to go into 50 centers in my city whenever I want to. Then I met at the client’s office and they had a desk and then I had lunch and took my computer with you know, we’re all were constantly in motion, very few of us sit at the desk all day long. In one location, certainly not five days a week or not permanently. If we, if we had a job like that, we’d probably have a stand up walking desk we’re still a traveler. So things that are needed in business today are different, reservation system, travel management systems, software that tracks users and where they are, what their cost, where all of these things are new to the real estate sector. What was the real estate sector? Now we refer to it as workplace. And where is your workplace? I don’t know, it’s anywhere. I’ve got a connection, really I know. I’ll be traveling tomorrow, I’ll be coming back to New York for five or six days, and my first office tomorrow will be my car as I drive to the airport. My second office will be the airline lounge where I’ll have an hour’s worth of work. My third office will be the plane itself where I’ll have a data connection when I get off the plane. My fourth office will be a taxi or car to pick me up and I’ll end up at my hotel, all that time I will have been connected and productive. Where in the 70s, when I was racing yachts and fooling around, trying to pretend to do something about the ocean, I’d get on an airplane, get on a 10 hour flight, be, you know, from the time you left your house until the time you arrived at your destination, you were incommunicado. You had no idea what was going on in the world you had, no one knew where. No one knew how to reach you, they couldn’t reach you. Etc.. So connectivity is the big change, I think.
Jeff Robbins [00:22:53] And it seems like a trend that’s just going to continue as we go from 4G to 5G connections, faster, more connected, and also things like self-driving vehicles where you don’t even need to focus on the road. You could be working, I suppose?
Frank Cottle [00:23:13] Oh, yeah. I can’t wait for you here.
Jeff Robbins [00:23:17] I can’t tell if this is a utopian vision or dystopian vision. If we can, work it all the time everywhere, all the time.
Frank Cottle [00:23:24] It’s both no, no but let’s change that. Let’s change one word, we can be productive all the time.
Jeff Robbins [00:23:31] Right, yeah.
Frank Cottle [00:23:33] OK. Productivity might be personal time, yeah. If if I didn’t have to commute, and I remember I live in the Los Angeles area of course you live in the New York area. So if commutes are a pain in the ass. OK, they just are. And it doesn’t matter whether you’re connected or not. Ok, so think of all the added personal time we would have family time, quality time that we would have or if we wanted, we could instead of calling that family productivity, we could call it business productivity. Oh, wait. We’ve got the ability to do both. So you don’t have to look at where productivity is as necessarily just work. You know, it could be the arts it could be helping others, so many things…
Jeff Robbins [00:24:27] Which is one of the parts of the reason that that remote work is so often appealing to workers is that without a commute, there isn’t this chunk of time of productivity that’s taken out of their lives. You know, we have tasks that we need to do at work, but we also have tasks that we need to do at home. And some of them look a lot like the tasks that we need to do work, we need to research, I don’t know, paint colors for repainting the kitchen or, you know, these things that are can be done online or, you know, could happen in the same places that we’re getting, you know, we’re being productive for work. And so, you know, simply not having a chunk of time taken out of our lives for traveling to and from work is…
Frank Cottle [00:25:25] Yeah, that just generally not very productive people say, oh, that’s quiet time or I can think I’m doing. Yeah, yeah. You know, thinking in bumper to bumper traffic. I’ll tell you what you’re thinking about, is that the guy who’s tailgate. Yeah, so you’re it’s not really quality. Yeah, yeah. In that regard but and remote work is funny. We as a company, we’re fairly distributed, we have operations in 54 countries around the world and so we kind of understand remote working from each other and even our executive team. Nobody’s in the same city our CFO is in Vegas, where we have operations and call centers and stuff and our head of marketing actually is in Lexington, Kentucky, because that’s the lifestyle he likes to lead, and our chief administrative officer is in Monterrey, in Mexico, I’m in Newport Beach and so when we look at our own executive team, we are 100 percent remote and we always have been in, one of the things that I think is important is recognizing that to do business, to find the very best people, you shouldn’t have to disrupt their life. You know, if somebody loves living in the south eastern U.S. and likes horse country, well, they should live there, they shouldn’t have to move to Newport Beach or move to somewhere. They shouldn’t disrupt their family and uproot their kids and move away from their parents. So when we think of remote work, I actually think of it the opposite, I think we’re using technology to localize our work. None of these people work remotely they all work locally and we connect ourselves, and as you start crossing borders and cultures and time zones, that becomes even more important. Yeah. Very, very much important and it’s a big cost savings, candidly. You know, I remember the day and there still happens where somebody says, oh, I just got a promotion and I have to move, where are you moving? Well, I’m moving from Kansas City to Beverly Hills or my offices? You know, there’s a little bit of difference in the cost of housing did and who’s going to pay for that? Well, the company’s going to pay for that. They bought my house and they’re giving me a bonus to buy a new house, and they’re who really paid for that? The shareholders of the company and reduced dividends.
Jeff Robbins [00:28:11] Well, and they and they’re offering me a salary that makes it worth it for me to move to Beverly Hills, you know.
Frank Cottle [00:28:18] Exactly.
Jeff Robbins [00:28:19] And so just it’s I don’t think of it oftentimes as a cost to savings to allow people to remain where they are so much as it’s a cost increase. Maybe, just maybe that’s my perspective. Having run a distributed company for all this time, you know that it’s a cost increase to ask people to uproot their lives and. Yeah, and Antony to incentivize that, you need to kind of wow people on the salary front at least.
Frank Cottle [00:28:51] Well, you do and no, you’re absolutely right. It’s, it is an increase in cost, which if you can avoid, is an increase in savings. So it’s both things simultaneously, I think. And it’s very important when you get into corporate planning, figuring out how to deal with virtual offices and how to deal with that. The employee or the team member is as a traveler as opposed to us as being a static individual. It takes a little bit of a leap. Not so much today, generationally, we’ve got Gen Z coming up that’s our first fully native digital generation, which are very excited to interface with. Things are going to change. Yet again, they, too, will invent peace and sex, and they, too, will forget that they stand upon the shoulders of the millennials and they don’t care and they shouldn’t. Everybody has to have that inventive freedom. But I think we’re going to see radical changes in officing that will totally repurpose an awful lot of commercial real estate and even get into a lot of smart city issues and issues around making more space available, particularly in high density markets, new York is an example for housing and maybe making some adjustments in housing costs as a result, because you won’t need all those office buildings.
Jeff Robbins [00:30:30] I think there’ll be a number of shifts happening all at once and another shift will be, you used the term best people to find the best people. I, you know, you shouldn’t have to disrupt their life, it’s a real competitive advantage, you can find the best people if you’re not tied to your local talent market.
Frank Cottle [00:30:54] Oh, yeah, yeah, yeah you have to, you know, competitively. We’re all everybody’s a global company today. You might have three people on your team, but you probably have an offshore supplier and an offshore client and you’re using some technology that spans borders and things of that nature so, everybody has to think of being a global company today and then you should you shouldn’t just limit yourself locally, and once you make that mental breakthrough and get comfortable with it, then truly you can build anything. You know, we build projects and throughout the Middle East and Russia and we’re just starting in Africa this year, and yet we consider ourselves a Newport Beach company. And if you think it’s cold in Rhode Island, by the way, you ought to go to Kosan, Russia, the other day it was with 32 or… around 32 below 0 centigrade, 900 miles east of Moscow on the Volga River, huh? There you go.
Jeff Robbins [00:32:09] Wow. Yeah, I think it will be interesting to see companies, all those light bulbs going off among all the Fortune 500 companies where it hasn’t, I mean, we’re starting to see departments converting. I’m seeing more and more customer service is one that we’re that’s happening a lot. Especially customer service that’s happening over message boards and, you know, chat online where, you know, you don’t even need to worry about the audio quality. But even more and more companies like Apple are doing phone support with people from home.
Frank Cottle [00:32:50] Oh, we do, well, virtual call centers or contact centers or have been around for a while and that’s the person sitting at their kitchen table. That’s really, you know, who you’re interfacing with on a chat half the time we have a virtual call center structure as well inside of our company, the difference is that instead of having people at their residence, we use excess capacity in a business and coworking centers from the receptionist. We tied them all into a single system and try and basically get rid of waste, we pay the centers for their unused time of the people and we put them in our system so, that helps the business or coworking center generate additional revenue, helps the people to be more productive onsite as well. And it reduces our cost, our fixed costs, because now we have a variable labor pool. So we actually pay and we charge and pay for those services by the minute. Actually in six-second increments. So my labor pool for our contact centers and six-second increments.
Jeff Robbins [00:34:06] Wow! Back in the late, late 80s, I worked in Harvard Square at a Renta Max place where you could go in, and basically they were going into print out their their resumes and it was great I could sit there and read and do a whole lot of nothing, but it sounds like people aren’t doing a whole lot of nothing but spare time, no more receptionist just sort of sitting there.
Frank Cottle [00:34:33] No, it ended, you don’t want them to. People aren’t happy doing nothing, a whole lot I know.
Jeff Robbins [00:34:40] It’s true. It at a certain point, it feels like you’re getting away with something and it starts to eat at you, you know?
Frank Cottle [00:34:49] Yeah. Oh, I have a really easy job. I don’t have to think or do anything.
Jeff Robbins [00:34:52] Yeah, but when…
Frank Cottle [00:34:53] No, I mean with how rewarding is that?
Jeff Robbins [00:34:55] Right, but when my manager realizes that I’m not doing anything, they’re going to let me go.
Frank Cottle [00:35:00] Absolutely.
Jeff Robbins [00:35:01] It’s that feeling of, you know, feeling like you need to pretend that you’re working. Oh, yeah. Well, which ultimately is this you know, this is the flip side, right? This is this. I had a couple of these jobs over the course of my life and these were the things that led me to think, you know, I think that inherently people want to be productive. They want to kind of feel their worth, show their worth. And, you know, if you trust people, if you respect people and let them work, they will work with, you know, the fear about remote work always, especially from conventional legacy managers who’ve worked in and co-located offices for for most of their career is how will I know that people are working? How will I, how will I trust that? And it doesn’t take long to realize that you can and people will work, yeah.
Jeff Robbins [00:36:07] Talk to me a little bit more about sort of management trends that you’ve seen over time. You talked about the idea of sort of presence versus productivity, which is a really interesting concept that just because people are present doesn’t mean they’re productive. And as we go. I think in a great way, in a sort of maturing of society, kind of way from focusing on presence and confusing that with productivity to focusing more on results oriented kinds of things and looking at the productivity itself. This is great, but talk to me about kind of what you’ve seen over time and that kind of stuff.
Frank Cottle [00:36:56] Well, if I go back and look at the office. What do they have, that TV show that’s called office? I think. OK, if you remember that it was all about personalities, right and everything. Today, if I look at the office, it’s all about data, it’s all about data. You’ve you managed by your KPI you’ve got data which becomes information which turns into knowledge, which becomes actionable. OK, so everything is data driven because we can collect so much information and define our metrics so easily and when you’re talking about productivity a minute, you’re saying that people liked to be productive. I also think people least I think people like to be quantified. They like to know how productive they were and what their productivity meant and how it relates to others so, the use of data to drive the metrics to understand that is a major change, I think that I’ve seen over the last 50 odd years that I’ve been in business got I’m sounding old. It’s I’m sounding old yet I’m the one that’s all excited about Gen Z so… Let’s go where it’s good. You know, we’re going to see offering change. And by 2022-2023, you’re going to walk into your workstation, your workplace, wherever it is, slip on your headset, your haptic gloves and enter your office with virtually. Virtual reality officing will become start to become the norm around 2022-2023. And by 32 33 there will be nothing else and when that happens, the way we communicate will be through holoportation you and I would actually be sitting in the same room for this conversation and instead of both looking at a Zen castra screen, we’d be sitting in the same room virtually, it could be a third party room, it could be one of all each of our individual rooms. I could design my office and have you come into my virtual reality office, which if you think about it, why is real estate in Manhattan so expensive? Well, because there’s a limited amount of it, right, and if you want a big office with an overlooking Central Park first, you’re going to really pay for it. Second, it’s even then it’s hard to get overall, but if you could just slip on a headset and be in that same facility of an office and have the rendering which is coming from the gaming companies at such speed right now, then you really don’t need to be there, you can be in Brooklyn or the Bronx. So, that building is very, very expensive for officing, no longer has the same value for the quality because you can have that big office overlooking Central Park, but you’re in the Bronx and people can come and go from that office now. And so, when you look at Gen Z and this is why I’m pretty excited about it, that’s our digital generation. What’s their big thing? Video games, right. That’s been the huge driver. I mean, we’ve even got wonderful professional athletic leagues now in video gaming, E Games series is we’re going to have E Games Olympics soon. Ok, as all of this comes along, but as this generation starts to mature, they finish high school, which they’re doing now, enter and finish college of a lot of them don’t necessarily go to college now. The time they spend on video games is going to be reduced. They’re still going to be engaged, you’re still going to be using video technology for entertainment purposes, but their time commitment is going to be less, and so those gaming companies are saying, well, where are they going to be? Oh, they’re going to be working. I know, instead of League of Legends, let’s have the lipstick building in New York, let’s build virtual real estate. And that’s what’s starting to happen. We have virtual cities being built where you can actually buy and sell space, where you can build shops. Virtual real estate will become a big part of the commercial real estate industry and our company will be selling not necessarily so much space, still some space, but not as much. We’ll be selling software that provides this sort of work environment. And that’s something that you say generationally will be changing. It’s just this is an absolute if you don’t think so just look at Microsoft’s new Holoportation devices.
Jeff Robbins [00:42:06] Wow, yeah, that’s interesting. But there’s a whole lot of stuff around that so, that it’s really interesting to think of the effect. If you follow this thread, the effect that virtual reality would have on physical real estate, where, you know, it’s not so important that where you are physically, it needs to be as connected as it was in the past. I mean, that’s…
Frank Cottle [00:42:39] Well, it you know what the old adage about real estate, location, location, location. Just what the new one is. Bandwidth, bandwidth, bandwidth. Location doesn’t matter anymore. OK, now, if you want to walk out, have a beautiful park in Central Park to go to during lunch, if you want to have nice restaurants to eat out next, your office will, of course, location.
Jeff Robbins [00:43:08] It’s important to remember what you can and can’t do in virtual red. You can’t eat, eat virtual reality.
Frank Cottle [00:43:17] Are you sure?
Jeff Robbins [00:43:18] Well, you could go to the restaurant and maybe you’d eat the food delivery in the atmosphere of the restaurant. But, yeah.
Frank Cottle [00:43:25] OK, yeah. I’m just going to say, OK, let’s take that strength a little bit further. We walked into the restaurant together and we order and within fifteen minutes the order is delivered to us.
Jeff Robbins [00:43:41] Right.
Frank Cottle [00:43:44] That’s all happening, right now, the order delivery processes are so many delivery processes, we’re looking at one right now and we looked at all the delivery drivers. And then you look at their time and you think of waste. They know they’re not real busy between about 9:00 and 11:30 and they’re not real busy between about 2:30 and 5:00 that they’re not busy again after 7:00. All the Ubers and all of the drivers have these hot, hot times a day and the dead times of day. Well, those dead times of day now they’re delivering other things, just like we used the virtual call center concept. Well, now these delivery drivers are delivering packages or delivering food. All these things are coming about so, just in time, everything is what we’re going to be dealing with in the future. So that you can go to a virtual lunch together in your holoportation structure.
Jeff Robbins [00:44:47] Well, its… I’m going to have to rethink everything.
Frank Cottle [00:44:52] Good, good. That’s why you brought the old guy on, right?.
Jeff Robbins [00:44:57] I guess so, Frank. Wow! We got in all kinds of stuff here so, what… I guess, you know, if we’re talking about virtual reality, what are the other sort of… Flabbergasting kinds of things that you’re thinking about around all of this. Like what, what else do you what do you foresee changing? That people will need to kind of prepare themselves for?
Frank Cottle [00:45:33] Well, I think a collaboration in the workplace is changing. Historically, we collaborated by meeting around the water cooler during a coffee break or something of that nature. Then we leave we started collaborating always in conference and meeting rooms, things of that nature. Today, we’re collaborating online using everything from old video systems of the late 70s, early 80s to the Web based systems we all used today constantly. We’re going to see more and more collaboration and open collaboration to where you’ll be seeing skill set collaboration structures. We have a skill set sharings structure that we’re playing with right now and where you’ll basically have people on the same system or in the same skills community, you might be an attorney and I might be an accountant, someone else might be on my marketing company, etc. But we’ll all be part of the same skills sharing community and we’ll collaborate back and forth, trading virtual currencies, which is a good way to avoid taxation, by the way. You don’t have to make money to hire an attorney and pay with after tax dollars if you’re just collaborating back and forth. So there’s a whole number of issues that will come up on skills sharing, barter systems that we’ve been around forever, you know, literally forever. You know, the first caveman barter, you know, an arrowhead for a mastodon steak. So…
Jeff Robbins [00:47:17] That’s not just to get a good Mastodon’s steak anymore.
Frank Cottle [00:47:22] Well, you can, but they’re frozen, I hear they’re frozen. They’re up in the tundra.
Jeff Robbins [00:47:25] And the times have had east of Moscow yeah.
Frank Cottle [00:47:30] Yeah, just east of Moscow, right. I was I could go all sorts of strange places with that and want. The, but we will see a more open collaboration and large scale collaboration communities that’s going to become a big part of ongoing business models. I think even more so than it is today, you know, crowd sourcing information is popular right now. We’re going to see a big refinement of that, and that’s going to be built around physical communities that have a certain software set and it’s going to also be create more definition to those communities and community and the concept of community has become a watchword in real estate. We don’t have occupiers, heaven forbid, we call them tenants and I’m a landlord. We have communities and communities, all have members. And the membership and how you interact with that membership, which we used to call networking. So that’s not much of a physical change or an activity change, just a name change a little bit. But the way we think of that community and how open we are in sharing with it is changing. And again, we’ll see more and more common technology systems feeding those communities. There’s a beautiful one based over the Netherlands right now called Serendipity Labs that believes gives me serendipity machine, that basically it’s of free use of space, free use of everything, and you pay for it all with social capital only. And at an emerging business model, that’s very interesting to follow is what’s the value of social capital, and it’s really that community sharing, skill set sharing issue. That’s what we do, we created the All Good Workspace Foundation, few years ago. And what we do with the foundation is a chair of a public charity is we take the vacancy factor from within the business center and coworking industry and we donate it to charity.
Frank Cottle [00:49:59] So I know at any point in time that there’s gonna be 7 to 12 percent vacancy in a typical business or coworking center. Good market, bad market, good economy, bad economy. That’s the range it’s going to run in. Well, if I asked the owner of that facility to donate half of their vacancy factor to charity through our foundation, real estate as an expense is usually the second highest expense after raising of capital for all charities. So if we can take the second highest expense and remove it from charities and at the same time put vacancy to good use, unused space to good use. Think of all of the unused commercial office space in the half of the vacancy factor in New York City. Right now, we have about 200 facilities nationally that are donating their space in this in this format and we’re growing it constantly. So, again, talk about cultural changes getting rid of waste. In France, now, it’s illegal for grocery stores to dispose of food. I’m not always one to follow the French politically with their laws and things, but they basically said, you know, we’re not going to allow waste, that food now has to be donated. If once it reaches its expiration and something has to be done with it, you can’t just throw it away. That’s a good thing. Yeah, especially a good thing with real estate. Because, you know, it’s like an airline seat. You know, a day passes and it was unoccupied. Well, then you’ve lost that forever. And so we think that we can not just change the way people work, but we think we can change the world that we all with them.
Jeff Robbins [00:51:52] Yeah, it’s interesting stuff and it sounds like you’re coming at it with a lot of experience and some really interesting perspectives. Before we start to wrap up, is there anything that we haven’t touched on that that you wanted to mention?
Frank Cottle [00:52:15] Well, I think that one of our core businesses is a virtual officing alliancevirtualoffices.com. And in that business we’ve created the reservation to booking systems for meeting room requirements globally, which can we look at the work place as a place to service travelers. And we also know that a lot of people that are remote workers, they actually need a commercial address. I’ll give you a good example, if if you and I want to do a form, a company tomorrow, which I’m open to doing if you want, I mean, why not? Right. We both have interesting backgrounds if we wanted a company and we said we go into the bank and say, well, we’re going to use Franks address and we’re going to use Jeff’s cell phone for our company, we couldn’t get well, we probably couldn’t get a bank account, but we couldn’t get any corporate credit. No way. You have to have a commercial address with a landline phone in order to get through the credit rating processes that the banks use that. So, even if you are a small entrepreneur…
Jeff Robbins [00:53:28] So that’s got even better in the past 10 years, it went dead in 2006 when I started Lalobot that was certainly the case, and it was really very difficult. There were just the thing I used to say is that there just weren’t boxes to check on these forms. You know, for we don’t have an office or those kinds of things. I think a fair amount of that stuff has gotten better. But you’re…
Frank Cottle [00:53:56] Well, we’re actually seeing a backlash, I guess. Flick back.
Jeff Robbins [00:54:01] That makes sense.
Frank Cottle [00:54:01] Yeah, it actually is flipping back because, know your customer bank credit reporting requirements now, it really strengthened. And part of that is driven. Know, your customer issues, part of that is driven by anti-terrorism security, anti fraud provisions that are in the laws now and probably should be some of them at the least. And so if you don’t have if you’re going to if we’re going to create an entity, that entity must by law have a registered agent. That entity must have an address, that address should match what that industry’s business is from an SIAC code point of view, from a zoning purposes. And that entity will have to be able to get a business license in order to do all of that. You have to have a physical commercial address. 99 percent of the time and you have to have a telephone number be it will be a VoIP number today, not an old copper line, but you have to you do have to have a telephone number that matches into that address if you’re going to get commercial.
Jeff Robbins [00:55:10] And for a lot of people running, you know, fully distributed company, they end up in a position where their home address becomes the corporate address. And then that gets published everywhere. And every so often you get people with stories of like someone showing up at their front door just to inquire about a job.
Frank Cottle [00:55:31] Oh, yes. Yes, that happens, and honestly, if you start reading into the law, too, we ought we form entities to protect ourselves from liabilities, basically the term of the corporate veil. Well, if you’re using your personal cell phone and you’re using your home as the address for an entity, the corporate veil just got about 10 times thinner. OK. You are really not a separate entity, you really are a proprietorship. And so there’s a lot of things from a credit point of view, from a liability point of view, from a convenience point of view. Plus, you don’t want your neighbor, who’s the plumber, having 14 trucks parked in front of his house. There’s all of those issues that come along. So virtual officing in our industry shelves. Yeah. All of those problems and yet does so incredibly reduced cost over conventionalized space..
Jeff Robbins [00:56:35] Even more than that It’s sympathetic to the situation that, you know, the idea of, hey, can we set up this location is our corporate location. Is not something that’s going to be anathema, it’s going to be a new, weird idea that any given, you know, location may or may not do that. But they will have heard of it before.
Frank Cottle [00:57:04] Oh, yes, absolutely. Well, you know, it’s funny when someone calls and I don’t care who it is that they want to do business or we’re gonna do business with them. The first thing I do is look at their address and run it through Google Maps. And I look at a street view. Is that a real person in a real company, or is that the backside of somebody?
Jeff Robbins [00:57:28] Is it a U.P.S. store? yeah.
Frank Cottle [00:57:30] OK. Is that a huge U.P.S. store? Exactly. And so, like I said, data is what’s changing. So I have access to that data now, which 10 years ago I didn’t have access to. Yeah. So I can make I can make a more informed decision about who I want to do business, and the way you position yourself in business today is critical in that regard, particularly for startups. They think, oh, we’re a startup. Let’s say Bill Gates started in a garage. Yeah.
Jeff Robbins [00:58:05] Not for long.
Frank Cottle [00:58:06] And they didn’t stay there too long. Yeah, he didn’t stay there too long. So it’s that sort of thing that is changing.
Jeff Robbins [00:58:17] Cool! Well, if people wanted to follow up with questions for you, were are new ideas, business opportunities, where should they get in touch with you.
Frank Cottle [00:58:31] The easiest thing is my email address, my direct e-mail address. It’s posted all over, so there’s no hiding and that’s [email protected].
Jeff Robbins [00:58:49] Great, well, Frank, thank you so much for coming on the podcast. It’s always really interesting to bring on people with new perspectives and new ways of looking at the same kinds of stuff and I have to say, this is the first time we’ve really dug in to virtual reality in particular. So it’s that’s great. It’s great that you’re thinking about all this and like I said, coming at it with so much perspective. So that’s great. Thank you.
Frank Cottle [00:59:21] Well, we’re happy to help and spread the word and actually, if anyone is has a new idea and is looking for investment, they go to the futureofworkfunds.com and that’s our private equity group that we do invest in proper tech.
Jeff Robbins [00:59:43] Yeah, yeah. This is, we’ve got a lot of people listening this podcast who are thinking about and rethinking work. So, yeah, great.
Frank Cottle [00:59:55] Well, I’ll be at the speaking at the Future Workplace Summit on Monday and Tuesday of next week in New York. So that’s another place that people enjoy.
Jeff Robbins [01:00:05] Super, Thanks Frank.
Frank Cottle [01:00:07] My pleasure.
